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TABLE OF CONTENTS
1-01-2008

TABLE OF CONTENTS
TABLE OF CONTENTS............................................................................................. 1
CHAPTER 2: PROCUREMENT STRATEGY ...................................................... 3
2.1 AN OVERVIEW................................................................................................. 3
2.1.1 How can Public Procurement be defined?.............................................. 3
2.1.2 What is the Pre Tendering Procurement Strategy?................................. 3
2.1.3 What is involved in the Pre Tender Phase?............................................ 3
2.2 PROCUREMENT BASICS................................................................................... 3
2.2.1 What is the mission of Public Procurement?........................................... 3
2.2.2 What are the objectives of Public Procurement? .................................... 3
2.2.3 What is meant by Value for Money?....................................................... 3
2.2.4 What is Best Value for Money? .............................................................. 3
2.2.5 How is Value for Money Achieved? ........................................................ 3
2.3 PROCUREMENT POLICY................................................................................... 3
2.3.1 How is a Positive Procurement Culture created?.................................... 3
2.3.2 When is the Procurement Process Outsourced? .................................... 3
2.3.3 Why Collaborate and Aggregate with other contracting authorities?....... 3
2.3.4 What are the principles of Procurement Activity?.................................... 3
2.3.5 How can Environmental & Sustainability Issues be promoted?............... 3
2.4 MARKET ASSESSMENT .................................................................................... 3
2.4.1 What is the Role of Competition in Public Procurement?........................ 3
2.4.2 How can Contracting Authorities Engage the Market?............................ 3
2.4.3 When is Market Sounding Undertaken? ................................................. 3
2.4.4 What is Market Creation?....................................................................... 3
2.4.5 When is there a need to Source Suppliers?............................................ 3
2.4.6 How can suppliers be retained through the Procurement Process?........ 3
2.4.7 What about monopolies and cartels?...................................................... 3
2.5 THE PROCUREMENT PROCESS ........................................................................ 3
2.5.1 Appointment of the Procurement Team.................................................. 3
2.5.2 What are the possible Procurement Procedures?................................... 3
2.5.3 What are the current EU Thresholds? .................................................... 3
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2.5.4 What are the procedures for contracts above EU Thresholds?............... 3
2.5.5 What are the procedures for contracts below EU Thresholds? ............... 3
2.5.6 What needs to be considered when advertising a tender?...................... 3
2.5.7 What is an acceptable procurement timetable? ...................................... 3
2.6 FRAMEWORK AGREEMENTS AND CALL-OFF ARRANGEMENTS .............................. 3
2.6.1 What are the stages of framework agreements? .................................... 3
2.6.2 Why use framework agreement?............................................................ 3
2.6.3 Examples of when Framework Agreements are useful ........................... 3
2.6.4 How is a Call-off arrangement used?...................................................... 3
2.7 EVALUATION STRATEGY .................................................................................. 3
2.7.1 Evaluation stages and their linkage to the tender procedure................... 3
2.7.2 Key evaluation principles........................................................................ 3
2.7.3 Determination of Technical Specifications .............................................. 3
2.7.4 What types of specifications can be used?............................................. 3
2.7.5 What criteria should I use to select suitable economic operators?.......... 3
2.7.6 What criteria should I use to award the contract? ................................... 3
2.7.7 What about the Evaluation Panel?.......................................................... 3
2.7.8 Summary of the decisions to be taken at the level of formulation of the
evaluation strategy ................................................................................. 3
2.8 CONTRACT CONSIDERATIONS .......................................................................... 3
2.8.1 What is the Contract trying to do?........................................................... 3
2.8.2 What type of contract should be issued? ................................................ 3
2.8.3 What will be the contract monitoring process?........................................ 3
2.8.4 How long should a contract run for? ....................................................... 3
2.8.5 What type of payment mechanism should be put in place? .................... 3
2.8.6 Negotiating on variations to the Contract ................................................ 3
2.8.7 What types of commercial arrangements are available?......................... 3
2.9 PARTICULARITIES IN THE PROCUREMENT OF SUPPLIES, SERVICES & WORKS......... 3
2.9.1 What are the specific features of the procurement of supplies?.............. 3
2.9.2 What are the specific features of the procurement of services?.............. 3
2.9.3 What are the specific features of the procurement of works?.................. 3
2.9.4 How does the Legislation apply to mixed contracts?............................... 3
2.10 EXEMPTIONS TO THE RULES SPECIAL CASES .................................................. 3
2.10.1 How are the Exemptions defined?.......................................................... 3
2.10.2 What strategies could be applied in the exemptions? ............................. 3
2.10.3 How can competition be maintained in the Exemptions?........................ 3
2.10.4 Acquisition of Physical Infrastructure: Rent/Lease or Buy?..................... 3
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CHAPTER 2: PROCUREMENT STRATEGY
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CHAPTER 2: PROCUREMENT STRATEGY
2.1 AN OVERVIEW
Public procurement is one of a number of activities within the operations of the government
of the Republic of Cyprus that requires special attention in promoting good corporate
governance and better overall value for money.
The current level of public sector procurement makes a significant impact on the economy of
the island in sectors such as construction and public works, transport, energy,
telecommunications, and heavy industry. Local and regional authorities and public utilities in
the Republic of Cyprus regularly purchase goods, for example: computers, office equipment,
public transport vehicles; services, for example: catering or cleaning, management consulting
or technical assistance services; and public works for example: the installation of new public
transport infrastructure or the construction of new buildings.
There are approximately 760 Contracting entities, as defined by the Law, including Ministries,
Departments, Independent authorities, Municipalities, Bodies governed by public law, Bodies
in the Utilities sector and other local authorities. This provides a very wide and diverse group
with different approaches to public sector procurement.

2.1.1 How can Public Procurement be defined?
Public procurement can be defined as the acquisition, of supplies, services and works by any
public body and ranges from the purchase of routine supplies or services to formal tendering
and placing contracts for large infrastructural projects by a wide and diverse range of
contracting authorities. Public procurement involves the use of public money to accomplish
specified public purposes, beginning with the identification of a need and ending with the
completion of a contract. Examples include:
The Ministry of Commerce, Industry and Tourism plans to purchase a number of
floating pontoons for new marina developments at Larnaca and Paphos;
The Cyprus Tourism Organisation plans to examine the establishment of a local
partnership approach to the development of niche tourism across rural and coastal
areas;
The Department of Civil Aviation of the Ministry of Communications and Works
plans to expand the terminal at Larnaca airport within the next two years to
upgrade the facilities and deal with the increasing demands from tourism.
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The Department of Government Purchasing and Supply procuring the supply of
army shirts.
The Pharmaceuticals Services Department of the Ministry of Health procuring the
supply of medicines.

It is important that all public procurement across the different contracting authorities
reflects the latest and best practices in procurement as compliance with the EU
Directives and the EU Treaty principles on non-discrimination, transparency, freedom of
movement between member states.

2.1.2 What is the Pre Tendering Procurement Strategy?
In Chapter 1 the focus of our considerations was on project definition. A clear and sound
definition is the prerequisite for efficient procurement decisions and procurement operations.
Assuming that the Contracting Authority has determined a project is feasible and that there is
a robust business case and an approved Project Fiche the pre-tendering process may then
begin. This chapter defines the procurement strategy, focusing on establishing a clear
definition of the pre-tendering aspect of the procurement process. The Chapter incorporates
the requirements laid down by the European Union (EU) and Cypriot public procurement
legislation and best practice on procurement process and procedures from across Europe.
A procurement strategy provides a pattern of decisions and events associated with acquiring
specific goods, services and works to support your business. Any government purchaser will
be expected to produce a procurement strategy befitting the value and complexity of the
procurement. The strategy is set out at the pre-tendering stage of the process and assures
the Contracting Authority that the selected procurement approach is appropriate for the
proposed acquisition. The procurement strategy should facilitate a collaborative approach
and open communication between potential suppliers and the Contracting Authority.

2.1.3 What is involved in the Pre Tender Phase?
This phase involves the formulation of the procurement strategy by following the steps below,
during which appropriately justified decisions regarding the procurement are taken:







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Figure 2-1: Steps to be followed for the formulation of Procurement Strategy

Key factors influencing the procurement strategy relate to the degree of complexity,
innovation and uncertainty about the requirement, together with the time needed to achieve a
successful outcome.


2.2 PROCUREMENT BASICS
Any public sector procurement process requires a mission and related objectives that should
be recognised by all contracting authorities operating within the public procurement system
of the Republic. The existence of mission and clearly defined targets relates to achieving
2. Consider the
procurement
basics

10. Consider the
exemptions &
special cases &
adhere to when
appropriate
1. Outline the
Procurement
Strategy
3. Consider
procurement
policy/
requirements
4. Undertake a
market
assessment
5. Develop the
procurement
process
6. Examine the
use of
Frameworks
Agreements
7. Consider the
evaluation
strategy
8. Examine the
Contract
Management
9. Consider the
specifics of
supplies,
services& works
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value for money in public expenditure which is based around a number of key guiding
principles.
Depending on the complexity of a requirement, considerable input in terms of lead time and
expertise is required by contracting authorities to procure public contracts which requires a
structured process that covers
Defining what is to be purchased,
the most promising sources for deliverables identified,
the appropriate and correct procurement procedure has to be determined,
the clauses and terms of the tender documents and the contract have to be drafted
competitive bidding has to be arranged,
the evaluation of bids has to be organised,
the recommendation for the award of contract taking into account all the
advantages and the risks has to be prepared, and
All details need to be documented in an audit-proof way.
This section details the mission of public procurement and relates this to the practical
requirement of contracting authorities to achieve best value for money. This section
considers a number of key questions, including:
What is the mission of public procurement?
What are the objectives of public procurement?
What is meant by Value for Money?
What is Best Value for Money?
How is Value for Money Achieved? The Whole Life Cost

2.2.1 What is the mission of Public Procurement?
The mission of public procurement is to ensure and enable contracting authorities meet their
policy and business objectives in the delivery of better public services. The public
procurement process spans the whole project life cycle from initial conception and definition
of the needs of the public service through to the end of the useful life of an asset or the end
of a contract.

2.2.2 What are the objectives of Public Procurement?
The objectives of all personnel involved in public procurement are to:
Ensure an open, transparent and compliant process;
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Achieve continuous improvement on all categories of expenditure through a
transparent and fair procurement process;
Achieve Value for Money in all procurement activities;
Promote equality of opportunity for all businesses and in particular SMEs and SEs;
Work in partnership with the private sector and other organisations to achieve
value for money, quality and effective service delivery;
Promote innovation;
Encourage environmental and social sustainability through effective procurement
policies and practices.

2.2.3 What is meant by Value for Money?
All procurement of goods, services and works must be based on Value for Money (VFM),
that is, to deliver:
the right goods, services, and/or works
of the right quality
in the right quantity
at the right time
at the right price
And delivered to the right place.

Value for Money is not just about price.
Other factors that may also need to be taken into account when assessing Value for Money,
include:
Availability of suppliers - For example, if there are a large number of suppliers in
the market place it is likely that the cost of providing supplies, services or works
will be cheaper due to the higher level of competition. In this case it is likely a
contracting authority will receive better value for money.
Additional costs (i.e. transport, postage and packing, storage) These will vary
according to the location of the supplier and the requirements of the contracting
authority.
Possible discounts for bulk purchases (although these may be offset by interest
charges and storage costs). Economies of scale can reduce costs particularly if
there is an aggregation of need across different contracting authorities.
Objectives of the procurement. The objectives of the procurement need to be
tangible and measurable to be able to assess value for money.
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Environmental considerations and long term environmental costs It is
important that sustaining the environment is not always thought of as an increase
in costs. For example recycling of waste material on a construction site may
reduce clearing costs.
The cost of the procurement process itself. It is important that the cost of the
procurement process is not disproportionate to the costs of the actual contract
The location of the supplier. For example in an ICT service contract , contracting
authorities may get a greater number of consultant delivery days from a closer
supplier than one who includes travel costs and fewer delivery days.

2.2.4 What is Best Value for Money?
The purpose of public procurement is to obtain the best VFM (BVFM) and to do this it is
important to consider the optimum combination of whole life cost (i.e. acquisition cost, cost
of maintenance and running costs, disposal cost) of a purchase and its fitness for purpose
(i.e. quality and ability to meet the contracting authoritys requirements). This definition
enables contracting authorities to compile a procurement specification which includes social,
economic and environmental policy objectives (SEE criteria) within the procurement process.
Whole life cost includes both quantifiable and non-quantifiable or intangible costs and
benefits.
Procurement processes within contracting authorities can only result in best value for money
when the following ten guiding principles governing the administration of Cypriot public
procurement have been satisfied to an acceptable extent:
Table 2-1: The ten guiding Principles to achieve Best Value for money
Competition - Competition among suppliers should be encouraged in the most efficient
and effective way.
Efficiency & Effectiveness- fficiency and effectiveness should be sought in the
procurement process to secure value for money for the contracting authority.
Fairness/ Non Discrimination Act fairly during the whole procurement lifecycle
without imposing unnecessary burdens or constraints on suppliers or potential suppliers.
Avoid any favourably treatment to specific supplier or potential supplier.
Objectivity/Integrity/ Honesty Declare any conflict of interest that affects or appears
to affect their judgment; Reject gifts, hospitality and benefits of any kind from supplier or
a potential supplier, which might be reasonably seen to compromise their objectivity or
integrity.
Transparency Ensure equal conditions and accessibility to all economic operators, by
informing them in an open and transparent way.
Accountability Be accountable for the responsibilities assigned to them, as well as for
the decisions made by them, keep the appropriate records.
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Confidentiality/ Accuracy of Information/ Protection of Intellectual Property
Respect the confidentially of information acquired in the course of performing their duties
and not disclose any such information without having proper and legitimate authority to
do so.
Conformity to the Laws Serving the Public Interest/ Responsiveness Conform to
the national and EU legislation, as well as to other requirements and commitments
regarding public procurement. Serve the public interest and act with responsiveness in
using the taxpayers money.
Professionalism Work to a high standard of professionalism by complying with the
legislation in force and applying the best practices.
Green purchasing- Exploit the opportunities to incorporate environmental
considerations and issues in each stage of the procurement lifecycle.
2.2.5 How is Value for Money Achieved?
Essentially, whole life costing, (WLC), incorporating the acquisition, operation, maintenance
and disposal of the asset, is aimed at answering the question What is the minimum WLC of
achieving these business or policy objectives ? rather than the more limited question What
is the cost of buying this item? In deciding on which option to select for meeting a need or
providing a service, it is essential to consider all the costs involved in each option.
Some of these costs will be incurred at the outset, when equipment is bought or initial
payments are made for service contracts. However, many of the costs will only arise over the
life of the option, for example, as a result of operating the equipment, such as, energy costs,
equipment maintenance costs, staff training, and disposal costs, along with the
environmental impact of both the old equipment and the new equipment at the end of its
working life.
The cost of achieving an objective differs from the cost of buying an item in two ways.
Firstly a purchase may not be necessary for the achievement of the objectives
identified. For example; there may be a number of different options available such as hire,
lease, and partnership along with outright purchase. Second, the purchase price is unlikely to
be the only cost incurred as a result of the procurement. For example, there may be
operating costs including: fuel costs, maintenance and labour costs along with disposal costs
including recycling. Determining the full cost of meeting a given requirement involves an
understanding of how the eventual solution will be operated over the whole life. It is always
necessary to consider what the procurement is supposed to provide, the cost options of each
of the solutions along with risks and the relative WLC of meeting the business or policy
requirements.
The WLC of using an item can be broadly divided into three categories: acquisition, operating
and disposal costs.
Acquisition costs are incurred before the solution is ready for implementation.
Operating costs are incurred as a result of actually using it or keeping it available
(maintenance costs).
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Disposal costs are incurred on disposal or when dealing with site contamination or
other harmful effects.
There may also be some income that will be realised on disposal if there are assets
with a resale or residual value. This and any rental income when assets are not in
use can be offset against the costs in determining the whole life cost.
The following analysis of costs needs to be considered by contracting authorities when
considering the options of buy, lease, hire or find an alternative.
Table 2-2: Analysis of Costs
Type of Cost Detail of Costs
Acquisition Purchasers Legal costs
Cost for Writing Specification
Purchase Price/Rent/Hire Purchase Price
Software Licences
Fees to copyright holders
One-Off Licence Fees
Cost of Transportation to Site
Installation Costs
Preliminary Inspection Costs
Sustainable Development Costs
Operating Insurance
Accommodation of operators
Annual Licence Fees
Operatives Wages and Salaries
Fuel and Electricity
Cleaning Costs
Periodic Inspection Costs
Spare Parts and Other Maintenance Costs
Sustainable Development Costs
Disposal Sellers Legal Costs
Costs of Removing Installations
Cost of Transportation from Site
Refuse Disposal Charges
Site Clean-up Costs
Environmental Sustainable Development Costs
Although whole life costing deals with the total cost of an asset over its total life, it should be
remembered that different solutions may have different life spans. The cost of the chosen
solution should therefore be annualised to enable the costs of different solutions to be
properly compared (such issues can arise either at the initial business case or at the
evaluation stage provided that it has been stated in the tender documents and broken down
in the bidders proposals).

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The following simple example gives an illustration of how to annualise costs for
comparative purposes.
Example 2-1: How to annualise costs for comparing different solutions
Electro Mechanical Services requiring the supply and maintenance of 5 buses. A bus with
automatic transmission, which has a whole life cost of 270, 000 euro and a life span of 15
years, has an annual cost of 18, 000 euro. A bus with manual transmission, which has a
whole life cost of 200, 000 euro but a life span of only 10 years, has an annual cost of
20, 000 euro. The bus with the higher whole life cost has the lower annual cost. The life
span of a solution will, of course, depend on the length of time the solution is needed as well
as its durability. In the above example, if the bus was only needed for 10 years and the total
cost of using the bus with automatic transmission for the first 10 years would be
180, 000 euro, the bus with automatic transmission would deliver better value for money.
2.3 PROCUREMENT POLICY
Establishing procurement policy means taking essential case-by-case procurement decisions
within the limits that are defined by the EU Directives and the laws and regulations of the
Republic. All procurement activity needs to reflect best practices in procurement, which will
ensure the promotion of transparency, accessibility, value for money, equality and
sustainability. This section deals with some specific questions including:
How is a positive procurement culture created?
When is the procurement process outsourced?
Why collaborate and aggregate with other contracting authorities?
What are the principles of procurement activity?
How can the environmental and sustainability issues be promoted through
procurement?

2.3.1 How is a Positive Procurement Culture created?
A positive public procurement culture is one of the Public Procurement Directorates (PPD)
top policy priorities for raising the standards of public services throughout the public sector
and delivering a better public service. A positive procurement culture requires a top-down
commitment and leadership to the process supported by bottom-up processes and
procedures, including:
The development of strategic generic policies and procedures (such as this best
practice guide) on a cross - departmental approach which will ensure a more
standardized approach to procurement;
Ensuring there is commitment to the agreed procurement processes, at the most
senior levels within the contracting authorities.
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Making Best Value for Money central to any procurement activity; Ensuring that all
procurement activity is conducted in an open, transparent and non-discriminatory
way, allowing all potential suppliers to compete for business on equal terms;
Promoting long-term thinking and commitment to strategic procurement issues;
Ensuring that all procurement is undertaken with appropriate qualified professional
and experienced staff.
The following checklist can be used by contracting authorities to examine whether they
are operating within a positive procurement culture.
Checklist 2-1: Developing a positive procurement culture
Action Y/N
Do you measure and achieve continuous improvement in all categories of
procurement expenditure?

Do you achieve best value for money from all procurement activities?
Do you ensure accountability towards the Contracting Authority, the supplier
and the beneficiaries?

Do you promote equality of opportunity for all economic operators?
Do you promote integration with e-government?
Do you work in partnership with economic operators to achieve sufficient
capacity and competition, best value for money, quality and effective service
delivery?

Do you promote innovation?
Do you encourage sustainability and promote environmentally friendly
procurement?

Do you develop professional procurement skills and expertise?
Do you recognise the importance of programme and project management
skills?

Do you aim to maximize the influence procurement has on all non-pay spend?
(such as the development and/or implementation of new government policy)

Do you know what your key areas of spend are and therefore your main
budgetary commitments?

Like other professionals, procurement experts should:
liaise and network with other colleagues working in procurement;
improve and update their knowledge regularly;
Follow meticulously the ethics of their profession;
Measure and manage procurement performance.
This should be undertaken through continuous professional development (such as long-life
vocational training) and membership of a relevant professional body.

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2.3.2 When is the Procurement Process Outsourced?
Normally, a contracting authority will undertake the procurement process in-house; however,
there may be a valid reason to outsource one or several parts of the procurement process.
An example could be to reduce fixed personnel costs or engage technical and /or
professional expertise.
It is important to note that even if some parts of the procurement process are outsourced, the
decision-making still remains with the contracting authorities.
The following table outlines the strengths and weaknesses of the two options (in
house procurement and procurement through a third party procurement agent), as
well as the actions contracting authorities can take to reduce weaknesses of both options.
Table 2-3: Strengths and Weakness of different approaches to procurement
Option Strengths Weaknesses Actions to Reduce
Weaknesses
In-house procurement - Greater control on
technical &
commercial
procurement
decisions
- Greater control on
priorities,
- Flexibility
- Expertise developed
& maintained within
the team
- Reduced lead time
necessary to prepare
contracts to
outsource
procurement
- Procurement of
deliverables
unspecific to the
usual specialisation
- Unsteady workload
for procurement staff
(perhaps temporarily
under-worked)
- Lack of expertise to
deal with specialised
aspects of
procurement or the
contract (particularly
in small contracting
authorities)
- Lack of resources to
deal with demands
on procurement staff
- Ensure that in-house
personnel are an
integral part of the
procurement team
- Develop sectoral
expertise within the
in-house
procurement team.
- Manage the
expectations of
contracting
authorities on the
time required for the
procurement process
Procurement through a
Third Party
procurement agent
- Specialised technical
know how necessary
(health, science, etc.)
- Specialised
commercial know
how necessary (e.g.
PPP/PFI
arrangements)
- Flexibility on staff
levels within the
contracting authority.
- Possibility for
reduced
confidentiality on
forthcoming projects.
- Additional cost
- Reduced operational
control on the
procurement process
- Lack of development
of know-how and
expertise within the
contracting authority.
- Ensure strict
confidentiality
agreements are
signed with any Third
Party Organisation.
- Assign a member of
the contracting
authority team to
lead the procurement
process
- Incorporate staff
training and
development into the
procurement process
One of the main disadvantages of contracting outside experts in the procurement process is
the potential to create a situation in which the contracting authoritys key staff predominantly
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comprises outside individuals possessing the required expertise but having no experience
working as a team.
It is important that all staff employed within any contracting authority are properly
inducted at the start of their employment and fully adheres to all aspects of the Code
of Ethics and Best Practice Guide.
In case that a contracting authority does not have the necessary resources or
expertise to carry out the procurement process, it can assign the whole process to
another public contracting authority which has the relevant capacity and capabilities.

2.3.3 Why Collaborate and Aggregate with other contracting
authorities?
It is important that different government departments collaborate on essential aspects of
procurement to maximise use of resources, improve opportunities for value for money and
standardise their approach. The reasons to collaborate include:
sharing market intelligence
sharing best practice, expertise and approaches to procurement
Defining annual requirements to identify opportunities for collaboration or
aggregation of contracts across a number of contracting authorities.
It is important that government officials regularly and systematically pool market intelligence
and share strategic information about future projects and current bids, with a view to better
understanding the totality of the public sectors likely demands on industry and the nature of
the market necessary to meet those demands. This is particularly important in the Republic,
where there are sometimes questions regarding the volume of available industry capacity for
specialized contracts.
In the majority of cases this collaboration is most easily managed on a sectoral basis such as
IT requirements, finance requirements and so on.
Example 2-2: Collaboration of Contracting Authorities on a sectoral basis
The Department of Information Technology Services, which possesses expertise in
Information and Communication Technology, has undertaken the responsibility to procure
relative systems or services for all the Contracting Authorities. For this reason, the relative
needs of the public service are aggregated and in this way the public procurement approach
is formalized.
2.3.4 What are the principles of Procurement Activity?
As well as adhering to the Key Guiding Principles for procurement as outlined in section
2.2.4, it is important that all contracting authorities conduct business dealings with suppliers,
consultants and contractors on the following additional principles:
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place orders and award contracts in accordance with the law, regulations, relevant
internal policies rules, regulations, best value principles and the best practice guide
comply with the Code of Ethics for personnel involved in public procurement
adhere to the obligations of the government in the contract terms and conditions. It
is important for contracting authorities to ensure that any terms and conditions
included in a contract are realistic and achievable for the authority. For example, in
relation to payment or frequency of monitoring taking into consideration the
availability of resources.
ensure information given to suppliers is accurate, relative and fair
account for your actions and your part in reaching decisions
Project specifications and criteria should be as open and generic as possible to
avoid favouring any one solution or any one economic operator.
Managers should remind procurement personnel in writing and on a regular basis
(usually twice a year) of the risks of being targeted for fraud and corruption.
Procurement personnel should report such attempts immediately to their supervisors.

Conflicts of Interest
Personnel involved with procurement, (including members of tender boards and
evaluation committees) are required to advise their contracting authority of any
interests that might reasonably be expected to influence them and their activities as an
employee of the public sector. If it comes to your knowledge that a contract in which you
have any pecuniary or other interest, direct or indirect, has been or is proposed to be entered
into you should give written notice to your contracting authority through the nominated
procurement manager.
Gifts, even those of low value, should be rejected and returned by mail or if left
behind in the office should be pooled and made available to charity organisations, as
stated in Law 1/90, For the Public Service and in the recently devised comprehensive guide
on procurement ethics (which has been developed in parallel with this Best Practice Guide
on Public Procurement).

2.3.5 How can Environmental & Sustainability Issues be promoted?
Significant environmental and social impacts can occur throughout a supply chain and can
be reduced through procurement strategies. Some projects require particular environmental
standards from service providers or particular environmental credentials in goods to be used.
An important aspect of the contracting authority meeting its sustainability objectives is the
early identification of specific requirements and standards in the development of a
procurement strategy.
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Suppliers need to be able to meet the environmental and social requirements of projects, for
goods and services. In addition, good practice and the provision of information on these
issues in relation to the goods and services by the suppliers will help the contracting authority
meet and measure progress against its sustainability objectives and should therefore be
encouraged.
When developing a procurement strategy, contracting authorities can use the
following checklist to make sure measures are in place to minimise negative and
maximize positive environmental and social impacts within the procurement process:
Checklist 2-2: Minimizing negative and maximize positive environmental and social impacts
Ensure the procurement process complies with current and potential future
environmental legislation such as the use of certain materials or the labeling
requirements on goods.
Ensure that procurement supports the specific environmental and social objectives and
targets of programmes such as the energy efficiency of new buildings and equipment.
Ensure that service providers have the capability to meet the technical environmental
aspects of projects.
consider how goods are to be used and ultimately disposed of or recycled and request
that suppliers aid the contracting authority in minimising the use and disposal impact
As far as is practical and reasonable, request information from suppliers on the
environmental and social impacts of the products and services being supplied, and how
these have been minimised. In particular look for evidence of good practice such as
certification like fair trade.
Encourage suppliers to minimise the environmental impacts of their operations,
products and services by asking questions and thereby demonstrating the importance
that the contracting authority places on these issues. One straight forward way to do
this is for a contracting authority to specify the minimum standards (e.g. ISO) and then
evaluate if these can be met by the supplier. (It would be impossible to evaluate a
range of different environmental standards in an EU contract that can only be awarded
on the lowest price or MEAT).
Demonstrate to suppliers the contracting authoritys own commitment to environmental
and social issues through its own activities and explaining its importance to its
stakeholders.
When awarding contracts it is important that environmental criteria (such as exhaust
emissions and noise levels when acquiring vehicles) and social criteria (such as
accessibility for people with disabilities when constructing a new building) form an integral
part of the requirements as set out in the specification, (discussed in more detail in section
2.7.3).

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2.4 MARKET ASSESSMENT
Contracting authorities should continually engage with key sector groups to ensure and
enable the effective implementation of its policy and deliver on its requirement to provide
better public services. The most effective approach to bvfm is to maintain competition in the
marketplace. It is important that contracting authorities take a strategic, long term approach
to the marketplace to gain suppliers knowledge of markets and trends (market engagement)
as well as gain an understanding of the capacity and capability of markets in relation to
specific projects (market sounding).
There are some key considerations that need to be addressed in this section, including:
What is the role of competition in public procurement?
How can contracting authorities engage the market?
When is market sounding undertaken?
What is market creation?
When is there a need to source suppliers?
How can suppliers be retained through the procurement process?
What about monopolies and cartels?

2.4.1 What is the Role of Competition in Public Procurement?
Contracting authorities will benefit from keeping competition alive. They need to make sure
and build sufficient long term capacity and capabilities within the sectors they regularly
procure, through regular engagements with key sectors such as construction, IT etc. along
with the development of market intelligence. In a sellers market with little or no competition it
is likely contracting authorities will encounter an up-hill battle in ensuring best value for
money. In a buyers market with a lot of competition, there is a good chance of fulfilling their
mandate. Therefore, contracting authorities should use their commercial influence to help
improve the competitiveness of their suppliers and ensure that appropriate procurement
policies and principles cascade down the supply chain.

The following checklist outlines simple measures contracting authorities can take to
include SMEs and/or Social Enterprises in the supplier base.
Checklist 2-3: Maximizing SMEs and SEs in the supplier base
Ensuring the wide dissemination of information about procurement opportunities,
through appropriate business and voluntary and community networks;
Ensuring that any consultation panels/groups that are established have adequate
representation from a wide range of different suppliers to meet the differing needs of
contracting authorities and include SMEs and SEs etc
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Encouraging partnerships and collaborations within the sectors or with larger
organisations. This is often desirable in order to adequately meet the specific and
specialist needs of the contracting authorities
Sponsoring capacity building projects for SME and Social Economy businesses with
respect to procurement
Ensuring all goods and services should be acquired by competition unless there are
convincing reasons to the contrary. For example, the ability for a contracting authority
to maximize vfm through purchasing supplies through a receiver dealing with a
bankruptcy situation.
Working with small and medium-sized and social enterprises suppliers is to be encouraged in
order to strengthen long-term competition. The more SMEs and SEs bidding for work in the
long term the greater the competition in the market place. However any potential supplier
must meet the basic standards set by the contracting authority, such as:
pass a financial appraisal appropriate to risk (to ensure financial capacity);
show they have the technical capability for the requirement;
demonstrate that they can reliably deliver goods and services within required
timescales;
Provide customer support.
meet BVFM criteria
Comply with relevant legislation and policies.
An association of bidders can take either the form of a joint venture or a subcontract.
Under a joint venture all members, if awarded the contract, shall individually sign and
be jointly and severally liable for the entire assignment. This is not to be encouraged as it is
more difficult for the contracting authority to manage. Collaborative partnerships where the
lead supplier can propose to subcontract some of the work to another supplier are much
more manageable for contracting authorities. In this case the lead supplier should play the
main role in the provision of supplies, services or works under the contract.
At first glance it might seem logical to give a number of contracts for a certain type of
project to a particular supplier as they have the best historical record of performance.
Over time this is likely to diminish competition in the marketplace, leading to a monopoly and
creating difficulties in revitalising competition in the longer term.
Suppliers must not:
be awarded contracts without the application of a competition;
be used continuously without referring to the market place from time to time to
ensure BVFM is being achieved;
be used to the exclusion of other potential suppliers;
be connected to staff within the contracting authority without a Declaration of
Interest having been made;
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Contracting authorities must refer to the Laws of the Republic in order to ensure that all EU
and national policies and procedures related to public procurement are implemented.

2.4.2 How can Contracting Authorities Engage the Market?
It is important that contracting authorities engage in a two way communication process with
the marketplace when establishing the procurement policy. Strategic engagement can take a
number of forms and are detailed below.
One useful way to undertake strategic market engagement prior to the
implementation of policies is through Public/Private Reference Groups (PPRGs).
These groups usually consist of public sector officials, industry groups (such as the
Chambers of Commerce) and potential suppliers (usually MDs, CEOs or specific
representatives groups). The group can inform the effect of implementing certain government
policies or the adaptation of certain procurement processes. There is also an opportunity to
secure supplier input/buy in, to particular government policy.
Contracting authorities take responsibility for setting up PPRGs which may meet only a few
times/year depending on need. However they have proved invaluable in securing supplier
input/buy in to particular government policies.
It is important to keep detailed written records of all meetings and make them
available to all potential suppliers (for example on the website). Contracting
authorities should ensure that general engagements in respect of a project should stop as
soon as a formal procurement project is initiated.

2.4.3 When is Market Sounding Undertaken?
Prior (and well in advance) of any procurement exercise, contracting authorities may wish to
assess the reaction of the marketplace to a particular requirement or procurement process.
Particular areas of interest might be:
the more accurately estimate the required budget for a particular contract
to refine and further clarify the requirement and/or produce the specification
to identify potential suppliers
To develop general market knowledge.
There is no specific process for market sounding and it does not follow any specific EU or
national rules or procedures. It is however, appropriate for contracting authorities personnel
to make contact with suppliers through attending trade fairs, exhibitions and demonstrations.
Other ways of communicating include PINs, running workshops and conferences and via the
internet. The outcome of the market sounding process is for contracting authorities to have a
better understanding of the likelihood of generating a competitive response to a requirement.
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A key element is to gather and consider market intelligence within key sector groups and
bring the suppliers perspective to the public sector procurement process. The benefits of
market sounding include:
Saving time and effort by bringing a precise focus to later procurement activities;
early visibility of issues that will affect the project;
Early understanding of project risks;
Develop more competitive procurement strategies;
Ensure and enable capacity to meet future programmes and projects.
There are four key areas where market sounding may assist:
Assessing the feasibility of a proposed project;
Assessing the capability of the market place to deliver;
Assessing whether there is an established market to deliver the project and an
adequate number of suppliers;
Assessing the capacity of the market to deliver.
The following checklist provides a series of questions that a contracting authority may
wish to answer when undertaking a market sounding process.

Checklist 2-4 : Considerations when undertaking a market sounding process
Consideration Y/N
Is the project you are considering actually feasible? (technically,
financially, operationally and within the required timeframes)

Has the project ever been undertaken before?
Can the project be delivered by a single supplier?
Does the project require a consortium of suppliers due to its complexity
or innovation?

Is there an established market for the requirement?
Are there enough suppliers in existence for a competitive procurement?
Can the market deliver what you require within the timeframe?
Can the market deliver what you require on a large enough scale?
Market sounding may only be undertaken before the commencement of the procurement
process. It is important that personnel do not compromise any subsequent procurement
exercise in any way e.g. by giving any one supplier additional information on any forthcoming
contracts and therefore an unfair advantage in the bidding process.
When appropriate, contracting authorities should ensure that there is appropriate
consultation with members of the public who will be directly affected by the outcome
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of procurement and also with the wider community and other stakeholders.
Market sounding involves no element of supplier selection or bid evaluation and
involves no commitment from either side. Market sounding is not appropriate for
every project. It is probably more beneficial for new/innovative projects particularly within
ever developing sectors such as ICT, or projects involving high technical requirements such
as large infrastructural projects.
Engaging the market provides an opportunity to ensure that services provided are at
the forefront of those available.
2.4.4 What is Market Creation?
Contracting authorities may need to address a proactive approach to the marketplace when
they believe that market interest in a particular project may be low. This may occur if a
supplier believes that an existing provider is too strongly entrenched with the contracting
authority or if there are simply not enough bidders to respond.
There is then a need to take a different than normal approach to stimulate an interest and
generate a competitive market response. The contracting authority needs to approach the
marketplace and the ways of doing this is through, for example:
Market sounding processes as outlined above
Contacts with, for example: trade unions; supplier organisations such as the
Chamber of Commerce & Industry; organisations such as the Cyprus Tourism
Organisation; and trade bodies such as the Hotel Association and the Employers
and Industrialists Federation.
Running selling to events, for example workshops and conferences with the
participation of suppliers
The contracting authority website with an interactive discussion page.

The need to create a market is more likely to occur if:
the scale of the project is too large or too small,
the geographical boundaries appear unrealistic,
the project involves too many key stakeholders,
suppliers have concerns about the associated risks/commercial viability,
The requirements are new or specialist.

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2.4.5 When is there a need to Source Suppliers?
When there is a need to create a market it is likely that contracting authorities will also
experience the need to determine suitable potential suppliers from whom tenders may be
sought. This sourcing process is particularly relevant if:
the product or service has not previously been procured;
demand for goods or services not previously purchased arises;
there are too few known suppliers;
the existing supplier is performing badly;
the market is rapidly changing;
there is a requirement to improve competition between suppliers invited to tender
for a contract;
a benchmarking exercise suggests that VFM is not being delivered, i.e. it is
important to assess the value of a bid against recent bids for similar projects
across all of the contracting authorities.
When sourcing potential suppliers, it is good practice to consider small and medium
sized firms as well as larger, well-known companies.
PINs (Prior Information Notices) can help to alert potential suppliers to the opportunity
and open a dialogue with them. Potential suppliers may also be requested to
complete an expression of interest at this stage. Although this is not obligatory and
not stated in the Law, contracting authorities may wish to request an Expression of Interest
within the PINS in order to assess the level of interest/ potential number of suppliers that may
be interested in bidding for the contract. PINs include details of the contracting authority,
contact details and a brief overview of the requirement including background, type of service,
timescales and so on. While they should be broad enough to allow for flexibility later, they
should also be precise enough to avoid sending mixed, contradictory or misleading
messages to the market. Insertion of a PIN does not commit contracting authorities to
purchasing or proceeding with a project if circumstances change.
Written records must be retained on the appropriate file which show which suppliers
were invited to quote/tender, why suppliers were approached and when requests for
quotes/tenders were made. If in doubt about the inclusion/exclusion of a supplier at the
sourcing stage, consult with your Senior Procurement Officer/Procurement Manager (if
he/she exists). It is important to note that this is permitted only in certain procurement
procedures which are provided in the Law (e.g. Negotiation procedure without advertising)
Such dialogue is an act of balancing because it carries the risk of contravening the
principle of equal treatment. It must be clear to project designers that early market
engagement leading to the subsequent tailoring of project requirements to a certain
suppliers product is forbidden. Project requirements and specifications must be kept neutral
so as to allow open competition.
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As a Member State to the WTO Agreement on Government Procurement, Cypriot
contracting authorities can benefit from the access to markets in countries that have
ratified this Agreement.

2.4.6 How can suppliers be retained through the Procurement
Process?
Contracting authorities need to work towards developing and enhancing a long term
competitive marketplace. One important way to do this is to understand the suppliers
perspective throughout the procurement process and keep as many involved as possible.
Suppliers make decisions on the continuation of the bidding process at a number of key
points in the procurement process usually related to the time and cost associated with
submitting the bid against the likelihood of success. Key decision making points include, for
example, the issue of a PIN, OJEU advert, issue of a prospectus, pre-qualification
questionnaire, issue of the terms of reference and so on.
Ensuring a competitive response means holding on to as many bidders as possible,
therefore it is important that contracting authorities keep the different stages of the
process to a minimum i.e. do not issue a pre-qualification questionnaire unless it is
necessary.
The following outlines ways that contracting authorities can keep processes simple
and maintain a reasonable level of bidders, while also lowering the barriers to entry for
SMEs/SEs.
Table 2-4 : Lowering the barriers to entry for SMEs and SEs
Consider dividing a large project into a number of different stages (ensure you refer to
aggregation issues).
Set out a clear and realistic timetable at the start of the project.
Reduce bid fatigue through timing the release of contract notices across the
contracting authority
Ensure the project is commercially viable from the business case as outlined in
Chapter One
Convince the marketplace that the bid is winnable and that the contracting authority is
willing to displace the incumbent supplier or in-house provision. This may take a longer
term approach whereby the contracting authority needs time to prove that other
suppliers do win contracts due to their capability and capacity
Keep delays, uncertainties and changes of direction in the procurement process to a
minimum to reduce any additional expense or lack of interest from the bidder.
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2.4.7 What about monopolies and cartels?
Through ongoing market intelligence and a cross departmental approach to assessing the
marketplace, it is possible for a contracting authority to identify when suppliers may be
attempting to/ or have eliminated the competition thus forming a locally based monopoly. The
monopoly operates as one single seller and will work towards gaining a higher price for a
product or service on the basis that they are the only supplier. An example includes when,
large management consultancy companies agree collectively to continually under price
smaller, lower value contracts for a prolonged period of time (up to 1 year), while gaining
high profits on higher added value projects with the contracting authority. In the long term this
is likely to eliminate smaller suppliers that depend on these contracts for survival thus
ensuring only a few, larger, competitors remain in the marketplace.
It is important to remember that contracting authorities can inadvertently create a
monopoly in the marketplace by, for example being too specific or unnecessarily
setting standards too high within the specification.
Where monopolies cannot be maintained some suppliers of a certain group of
products may engage into cartels. This is an association of independent companies
formed to regulate the price and sales conditions of the products or services they offer.
Cartels are illegal and any suspicion must be reported, in the first instance to the
Commission for the Protection of Competition with a notification to the Accountant
General. Going for a different technical solution may be an option for the contracting
authority.
2.5 THE PROCUREMENT PROCESS
This section outlines a number of key decisions at the pre tendering stage and addresses a
number of key questions for the contracting authority, including:
What is important when appointing the procurement team?
What are the possible procurement procedures?
What are the current EU Thresholds?
What is the correct procurement procedure above and below EU Thresholds?
What needs to be considered when advertising a tender?
What is an acceptable procurement timetable?
2.5.1 Appointment of the Procurement Team
The procurement process can often be complex with a number of different roles and
responsibilities involved in the procurement chain. For every procurement exercise, a
Procurement Team needs to be appointed, with an identified project owner, which is
responsible for the implementation of the procurement exercise. The procurement team
involves all the personnel engaged in the procurement process including the Evaluation
Committees.
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The co-ordinator of the Procurement Team - referred to as the Procurement Manager -
carries the overall responsibility for the procurement process. This includes completing the
procurement planning as well as the implementation of the procurement exercise in relation
to:
Time;
Budget; and
Quality requirements.
Contracting authorities should ensure that the procurement manager appointed to a project is
able to undertake the following roles and responsibilities.
Table 2-5: Tasks of the Procurement Manager
Tasks of the Procurement Manager

General
Responsibilities
- Overall responsibility and accountability to deliver a success procurement
process
- Planning, organising, guiding, controlling and coordinating the team
members
- Accountability for cost, schedule, quality and scope of the procurement
- Information flow and communication between procurement team and other
stakeholders (e.g. beneficiaries)
- Compliance with all National Legislation and EU Procurement Directives,
Guidances and best practices

Specific tasks:
- Composition, coordination and leadership of procurement team (job
descriptions, supervision of results, quality control, etc.);
- Decision on any additional human resources needed, e.g. consultant
contracts for feasibility studies, technical specifications, etc.;
- Responsible for checking resource allocation, and related risks with the
relevant units of the contracting authority;
- Elaboration of a work plan and a time plan for the procurement
implementation respecting the wider project cycle in general;
- Elaboration of a communication strategy (internal) and advertisement/
publication needs;
- Market research and commercial enquiries;
- Carrying overall responsibility for drafting of technical specifications and
terms of references;
- Controlling change to the procurement scope, cost, or schedule;
Project Initiation/ The procurement manager should be assigned as early as
possible in the life cycle of the project in order to establish management responsibility as well
as to begin the development of the procurement requirements based on the stipulations in
the project document.
The Procurement Team is responsible for carrying out the different activities in the
procurement process. Experts with different profiles may assist the Procurement Manager
with planning and implementation the procurement exercise, and they may also assist with
obtaining necessary commitments within the Contracting Authority. All stakeholders should
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interact with the Procurement Team to ensure that requirements are properly understood and
implemented. The Procurement Team could consist of state employees, consultants and
others contributing to the procurement exercise.
Public Procurement, as project implementation in general, is team work, with particular
regard to cooperation and coordination. Thus, good experience has widely been made with
the use of interdisciplinary teams that initiate, plan, execute, control, and close the various
components of procurement. In general, there are organisational, financial, technical, legal
issues, as well as communication/ public relation, and IT/ EDP matters, that are to be
covered by the procurement team members. Usually, procurement experts do not work
exclusively for one procurement exercise, but several different projects and procurement
activities at the same time. In any case, the team members shall have clearly defined tasks
and responsibilities, taking into account changing requirements when the project is
progressing through its lifecycle.
The following definitions are used for the different procurement team members.
The Director of the Contracting Authority (or their nominated project owner) is
also the Budget Holder and has responsibilities as defined by Legislation including
ensuring the existence of available money for the project and the procurement
process
The Evaluation Committees evaluate the submitted tenders and have their roles
and responsibilities defined by legislation. In cases where the evaluation
committees are responsible for the awarding of the contract (depends on the value
of the contract to be awarded) the consent of the Director is required.
The Tender Boards are permanent teams at a Ministerial Level, and are
responsible for the awarding of the contract in cases where the value of the
contract is above EU thresholds, and also where there is a dispute between the
decision of the evaluation committee and the Director of the contracting authority in
contracts below the EU threshold.
The team of procurement Officers within the contracting authority is responsible
for the successful completion of the procurement process (i.e. preparation of
tender documents, publication, communications, etc). Some of the team members
are also likely to be responsible for the implementation of the contract.
The Project Board / Steering Committees are often formed in cases where the
project is large or complex
1
.
Public Procurement Directorate personnel provide support and advice on the
procurement process to the Contracting Authorities. In cases of EU funded
projects, PPD being the Competent Authority in Public Procurement, has to

1
The Regulation 201/2007, which concerns the Contracting Authorities of the Central Government,
foresees the appointment of a Management Committee by the Council of Ministers with specific
authority and responsibilities, for large and complex projects.
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approve the whole procedure and perform ex-ante controls. Generally PPD is
responsible for the:
preparation of Legislation fully harmonized with the EU Directives;
issuing Circulars regarding Public Procurement Matters;
providing training sessions to Contracting Authorities;
maintaining help desk facilities;
performing spot checks;
Monitoring overall performance and compliance of contracting authorities.
Contracting authorities are required to implement the procurement process involving
each of the team members in the following roles and responsibilities.





Table 2-6: Roles and Responsibilities in the Procurement Process
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Note 1 : Issuance of Compliance Certificate
In general, there are organisational, financial, technical, legal issues, as well as
communication/ public relation, and IT/ EDP matters, that are to be covered by the
procurement officers. Usually, procurement officers do not work exclusively for one
procurement exercise, but serve different projects and procurement activities at the same
time. An example of the most relevant areas within the procurement process is to be found in
the Responsibility Matrix below.
Table 2-7: Responsibility Matrix for Procurement Officers
Team Member Member 1 Member 2 Member 3 Member 4 Member 5
Roles &
Responsibilities
Head/Board
of Directors
Evaluation
Committees
Tender
Boards
Procurement
Manager
Procurement
Officers
Project
Board /
Steering
Committee
PPD
Officers
Business Case giving
approval
(project
design
team)

Budget Approval
Establishing
Procurement
Strategy/Arrangements

Providing Procurement
Advice & Support

Giving Procurement
Approval

Drafting Briefs/
Specification
giving
approval

Market Assessment
Managing Panels
Managing PPD input
Selecting Procurement
Procedure

Approval of All Tender
Documents

in cases
of EU
funded
projects
(note 1)
Managing the
tendering process

Evaluating Quotes &
Tenders
(giving
consent)

Awarding of the
contract


Approval of Award of
Contract

in cases
of EU
funded
projects
(note 1)
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Field of Activity
Organisation,
logistics,
documentation
e.g. Project
Secretary

Technical drawings/
specifications
e.g.
Technical
Engineer

Financial issues, cost
calculation, funding
schemes
e.g. Budget
and
Finance
Officer

Legal issues and
contractual matters
e.g. Legal
Officer/
Lawyer

IT and EDP issues Project
Secretary or
add. Team
Member

External
communication,
advertisements,
publications
Legal Officer or
Project
Manager or
add. Team M.

As can be seen by this table, any project has the potential for interdependencies and
overlapping responsibilities. The procurement officers responsible for finance and funding,
for example, will rely on the costs expected for elaborating technical specifications (Team
Member 2) as well as for publications/ tender announcements (Team Member 4), and others.
Teams may be formally or informally organised, and individual team members may be active
or inactive. In some cases, procurement officers could also be appointed for several different
tasks at one time, e.g. the Legal Officer, being responsible for the public relations as well as
legal issues. This depends on the complexity and requirements of the project e. g. the scope
of work and the level of expertise required. In any case, the procurement officers shall have
clearly defined tasks and responsibilities, taking into account changing requirements when
the project is progressing through its lifecycle.

2.5.2 What are the possible Procurement Procedures?
The EU public sector Directives permit four tendering procedures when the contract value is
above EU thresholds and guidance on the appropriate approach to procedures for contracts
below the EU thresholds. According to the legislation, contracting authorities shall apply the
open procedure and the restricted procedure when awarding public contracts. Only under
specific circumstances, defined by the law, can the negotiated procedure and the competitive
dialogue be used. For low-value procurement, simplified procedures are available.
Each of these procedures is outlined in this section and further details are addressed in:
Chapter 3 for the Open, Restricted and Simplified Procedures
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Chapter 5 for the Negotiated Procedure and the Competitive Dialogue
For each concrete procurement exercise, the selection of the appropriate procedure shall be
based on a careful analysis of the circumstances.
To select the procedure the contracting authority needs to evaluate three basic questions.
Is the value of the contract above or below EU thresholds?
Is the envisaged procedure permitted in the respective case? The negotiated and
the competitive dialogue procedures may only be used in specific cases as clearly
defined in Laws 11(I)/2006 and 12(I)/2006.
Is the envisaged procedure proper from a procurement management perspective?
Especially the expected contract value, time considerations and the potential of the
marketplace.
The following checklist can be used to assist in the selection of the correct procedure.
Checklist 2-5 : Choosing the correct Procurement Procedure
Consideration Yes No
Is the Value of the Contract above EU
Thresholds?
Open, Restricted, Negotiated
or Competitive Dialogue
Procedure applies
Open, Restricted or
Negotiated Procedure
applies. If the value of the
contract is below EURO
85.430,07, in addition to
the Open, Restricted or
Negotiated Procedure the
Simplified Procedure may
also apply.
Do you wish to limit the number of
tenders received?
The Restricted Procedure
may be more appropriate
The Open Procedure may
be more appropriate
Are there a large number of potential
suppliers?
The Restricted Procedure
may be more appropriate
The Open Procedure may
be more appropriate
Do you wish to save time in the
evaluation of a large number of
technical bids?
The Restricted Procedure
may be more appropriate
The Open Procedure may
be more appropriate
Does the requirement permit overall
pricing?
The open or restricted
procedure may be used
The negotiated procedure
may be used
Is it possible to specify requirements
for the service or goods with precision
to allow bidders to tender?
The open or restricted
procedure may be used
The negotiated procedure
may be used
Is the requirement complex and
needs to be clarified and developed?
The Competitive Dialogue
Procedure may apply
The Open, Restricted or
Negotiated Procedures
may apply.
2.5.3 What are the current EU Thresholds?
The EU published up to date financial thresholds relating to Supplies, Services and Works in
December 2007. These are outlined in the tables below.
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Table 2-8: EU Thresholds for Public Contracts
Supplies
()
Services
()
Works
()
All public sector contracting bodies listed in Law
N12 Annex III
133,000 133,000 5,150,000
Other Public Sector Contracting Bodies 206,000 206,000 5,150,000
Indicative Notices 750,000 750,000 5,150,000
Small Lots N/A 80,000 1,000,000
Table 2-9: EU Thresholds for Utilities Contracts
Supplies
()
Services
()
Works
()
All Sectors 412,000 412,000 5,150,000
Indicative Notices 750,000 750,000 5,150,000
Small Lots N/A 80,000 1,000,000
The following points should be noted in respect of the thresholds:
the EU thresholds are mandatory;
These thresholds are reviewed by the EU every two years and are announced to
the contracting authorities by PPD;
all amounts are stated exclusive of VAT;
Indicative notices relate to early warning notices of the procurement, i.e. a Prior
Information Notice (PIN). In cases where a PIN has been published, the
contracting authority has the right to decrease the time limits for the receipt of the
tenders in accordance with article 43 (4) of the Law 12()/2006.
Small lots refer to large contracts that are divided into smaller lots, usually to
encourage SMEs/SEs to bid for them. Importantly this acts as a deterrent to
contracting authorities trying to circumvent the appropriate procurement procedure.
As stated in Law 12 article 21(5)b it is important to note that the total amount of the
specific lots does not exceed 20% of the total value of all lots.

2.5.4 What are the procedures for contracts above EU Thresholds?
Open Procedure - This is a one-stage procedure whereby all interested parties can tender
for a contract. In this procedure, the contracting authority takes no steps to limit the number
of tenders received or to consider the suitability of suppliers prior to the submission of
tenders. The procurement of routine commodities is normally carried out through an open
competition as they are simple to specify and therefore to price. Examples would include
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office stationary, computer consumable through to the purchase of energy such as liquid fuel,
gas electricity etc. This procedure also covers service contracts such as consultancy, ICT
and financial services. It is also appropriate for small construction projects such as the
construction of a changing/shower facility at a seaside location or the supply and installation
of wind turbines.
If there are minimum requirements for the contracting authority then it is important that
they be made clear in the contract notice to avoid unqualified bidders incurring the
expense of preparing and submitting tenders.
Restricted Procedure - This is a two-stage process where only those parties who meet
minimum requirements in regard to professional or technical capability, experience and
expertise and financial capacity to carry out a project are invited to tender.
As a first step, the requirements of the contracting authority are set out through a contract
notice in the OJEU and expressions of interest are invited from potential bidders. The
contract notice may indicate the relevant historical information to be submitted or the
information may be sought via a detailed questionnaire (a Pre Qualification Questionnaire,
PQQ) to interested parties.
Prequalification of Bidders. The purpose of the pre-qualification is to assess
historical financial, economic and technical capacity and capability of prospective
bidders. This is possible where high costs of preparing detailed bids could discourage
competition, - such as custom-designed equipment, industrial plant, some complex
information and technology contracts or large or complex works.
It is important to note that, as a basis for pre - qualifying candidates, only the criteria
relating to personal situation, financial capacity, technical capacity, relevant
experience, expertise and competency of candidates set out in the European Directive
(Articles 45 to 48 of 2004/18/EC) and also in the National Law (Articles 51 to 54 of Law
12(I)/2006) are permissible.
The prequalification should be based entirely upon the capability and resources of
prospective bidders to perform the particular contract satisfactorily, taking into account their
experience and past performance on similar contracts,
capabilities with respect to personnel, equipment, and construction or
manufacturing facilities, and
Financial position.
The scope of the contract and a clear statement of the requirements for qualification needs to
be sent (via post or electronically from the contracting authoritys head quarters) to those
who respond to the contract notice. All such applicants that meet the qualitative selection
criteria should then be allowed to bid. The output from this stage is a restricted list of pre-
qualified economic operators.
The second step involves the issue of Invitation to Tender (ITT) documents to all those on
the restricted list. The ITT includes the complete specifications, the evaluation criteria, terms
and conditions of contract, pricing schedule etc.
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The Directives require that a number sufficient to ensure adequate competition is
invited to submit bids and indicate a minimum of five (provided there is at least this
number who meet the qualification criteria) and up to a total of 20 (is considered best
practice). In the restricted procedure the contracting authorities have the right to limit the
maximum number of candidates (economic operators) they intend to invite. In order to
exercise this right they should clearly state it in the Contract Notice and also to determine this
maximum number. According to the National Law 12(1)2006 this number cannot be less than
5 and is recommended not to exceed 20.
Contracting authorities may opt to shortlist qualified candidates. Short listing of
candidates who meet the minimum qualification criteria must be carried out by non -
discriminatory and transparent rules and criteria agreed in advance of issue and clarified to
potential competitors.
The restricted procedure is most commonly used :
when a contracting authority needs to ensure that potential bidders have the
capacity and capability to undertake the project, or
where there are higher levels of risk, (in high risk projects, such as large
construction projects, the restricted procedure enables contracting authorities to
eliminate those without the necessary capacity and capability at the first stage), or
the cost of tendering is high, (The first stage of the restricted procedure tends to be
short and succinct requiring no detailed costings or methodology from potential
bidders. This encourages more SMEs and SEs to bid for the first stage and receive
an outcome before undertaking a detailed bidding process), or
Where there are a large number of potential suppliers.
From a contracting authoritys perspective, the restricted procedure may appear to require
more input than the open procedure, due to a two-staged evaluation process. However, in
the long term it is less intensive as there tend to be fewer bids to evaluate at the detailed
technical evaluation process, i.e. stage two.
An example of applying the restricted procedure would relate to the provision of fleet
maintenance when the contracting authority wishes to outsource this service. It will be
important that potential suppliers meet all the economic, financial and technical requirements
for this work, as the contracting authority fleet is an expensive asset that cannot afford
excessive downtime or poor or dangerous standards of practice. Therefore, if a supplier has
had any legal actions in the past due to professional negligence or legal offences the
contracting authority would need to take this into consideration at Pre-Qualification Stage. If
this is the case then the bidder would not be allowed to proceed to the second stage of
tendering. However, in the open procedure this initial evaluation is not undertaken as a
separate first stage and therefore the potential suppliers who dont meet the minimum
qualification criteria have submitted a detailed technical bid that eventually wont be
evaluated.
Competitive Dialogue Procedure - This is a procedure, introduced under Article 29 of the
public sector Directive 2004/18/EC and Article 31 of the National Law 12(I)/2006 , designed
to provide more flexibility in the tendering process for more complex contracts, for example
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public private partnerships (PPPs). Contracting authorities must advertise their requirements
and enter into dialogue with interested parties, (pre qualified on the same basis as for
restricted procedure described above). Through the process of dialogue with a range of
candidates, a contracting authority may identify arrangements or solutions which meet its
requirements. Provided its intention is indicated in the contract notice or in descriptive
documents supplied to candidates, a contracting authority may provide for the procedure to
take place in successive stages in order to reduce the number of solutions or proposals
being discussed. The reduction must be achieved by reference to the award criteria for the
contract.
In conducting the dialogue, contracting authorities must ensure equality of treatment
and respect for the intellectual property rights of all candidates. When satisfied about
the best means of meeting its requirements, the contracting authority must specify them and
invite at least three candidates to submit tenders. The most economically advantageous
tender (MEAT) will then be selected. Aspects of tenders may be clarified or fine tuned
provided that there is no distortion of competition or discrimination against any bidder.
The opportunity to use competitive dialogue has been introduced into the EU Directives and
thus in the National Law. This could be used, for example, if a contracting authority wished to
outsource a major core activity then it would wish to enter into dialogue with a number of
suppliers. One possible example would be the requirement for systems support to a core
finance system. The contracting authority would be advised to enter into structure
engagements with a number of potential suppliers with the purpose of clarifying and
developing a detailed requirement that would allow the market place to compete and provide
a quality service.
Negotiated Procedure- There is two types of negotiated procedure:
(a) Contracting authorities advertise and negotiate the terms of the contract. This process
should normally involve the submission of formal tenders by at least three suppliers (pre-
qualified on the same basis as for the restricted procedure described above, provided
there are at least this number who meet the minimum qualification criteria) with
negotiation on final terms in a competitive process. This procedure may be used mainly:
where the nature of the requirement does not permit overall pricing;
where it is not possible to specify requirements for a service or goods with
sufficient precision to enable bidders to respond with priced tenders;
Where an open, restricted or competitive dialogue procedure was unsuccessful.
The negotiated process is normally used for major or complex ICT outsourced contracts.
This reflects the dynamic nature of the market place and the range of potential solutions that
suppliers can offer. For example, the procurement of a new digital mapping system.
Following market research it would seem that there are a number of innovative and suitable
products on the market. The contracting authority therefore develops a high level output
specification for future requirements. In addition detailed evaluation criteria would be
developed to allow for a wide range of potential solutions to be considered. Following a
Prequalification a restricted list has been produced and an Invitation to Negotiate (ITN)
issued. This ITN contains draft requirements, terms and conditions etc along with details of
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the evaluation criteria to be applied. It is essential that throughout this process suppliers can
refine their offers in a structured manner to the point were the contracting authorities believe
there is little further room for negotiations or refinement. At this point they would request a
Best and Final Offer thus ensuring the maximum opportunity to meet their business needs
and deliver VFM.
It is noted that the contracting authority may carry out the negotiated procedure in
successive phases, in order to reduce the number of tenders to be negotiated by
applying the award criteria referred to in the contract notice or the tender documents. Use of
this possibility should be recorded in the contact notice or in the tender documents.
(b) Contracting authorities negotiate, without advertising, the terms of the contract directly
with one or more parties, (see Chapter 5). This is a departure from the core principles of
openness, transparency and competition and is a very exceptional procedure. The main
instances where this procedure may be used are:
in cases of extreme urgency;
when, for technical or artistic reasons or due to the existence of special or
exclusive rights, there is only one possible supplier or service provider;
when an open or restricted procedure has not attracted any or no appropriate
tenders;
extension of existing contracts and repeat contracts subject to certain conditions;
For the purchase of supplies on particularly advantageous terms, for example,
when a supplier/receiver/liquidator of a bankruptcy is definitively winding up a
business.
Contracting authorities should ensure and document, that the precise circumstances
justifying negotiation, as set out in the EU Directive and Law N12 Chapter V sections
30 to 33, exist before deciding on the use of this procedure.
The most common use of this process is when there has been a call for competition and no
(or no appropriate) offer is received. It is important before moving into negotiations to find
out why the market has not fully responded. For example, a contract for the hire of
agricultural tractors during the peak farming season might result in only one supplier
responding. Before negotiating with the supplier it is essential to ensure that a benchmarking
exercise is undertaken to ensure the contracting authority are not paying over the normal
competitive rates.
The following flowchart outlines the steps contracting authorities should take when
procuring contracts above EU thresholds.
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Figure 2-2: Steps to be followed when procuring contracts above EU thresholds
Procedure
Set basis for award: Set basis for award:
Set selection/qualifying criteria and
weighted award criteria
NEGOTIATED RESTRICTED OPEN
Set selection/qualifying criteria and
Invite expressions of interest in
OJEU/other media

Draw up Tender Draw up Tender
If MEAT, set and record, weighted award
criteria
Set selection/qualifying criteria and
weighted award criteria Select/shortlist candidates (at least 3)
who meet qualification criteria
Invite most qualified (at least 3)
Invite expression of interest in OJEU/other
media
Advertise; invite tenders in OJEU & other
media
Allow appropriate time for expression of
interest
Draw up tender documentation

Allow appropriate time for submission of
tenders
Select/shortlist candidates (at least 5) who
meet qualification criteria
Request proposals/tenders

Examine tenders

Evaluate proposals/tenders

If MEAT is basis for award have term
evaluate tenders using weighted scoring
criteria (including price)

Allow appropriate time for submission of
tenders
Negotiate and conclude most
economically advantageous terms with
one, on an objective basis
Select highest scoring tender
If MEAT is basis for award have term
evaluate tenders using weighted scoring
Award contract

Award contract on basis of successful
tender
Sign the contract Publish contract
notice in OJEU
Select highest scoring tender

Sign the contract & Publish contract
award notice in OJEU
Debrief unsuccessful bidders

Award contract on basis of highest scoring
tender
Debrief unsuccessful bidders

Sign the contract & Publish contract
award notice to OJEU
Debrief unsuccessful bidders

Issue tender docs & invite those who
qualified to bid
Manage the hierarchical recourses (if they
arise)
Manage the hierarchical recourses (if they
arise)
Manage the hierarchical recourses (if they
arise)
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According to the legislation in force, contracting authorities shall apply the open
procedure and the restricted procedure when awarding public contracts. Only under specific
circumstances, defined by the law, the negotiated procedure can be used. For low-value
procurement and specific procurement simplified procedures are available
2
.
2.5.5 What are the procedures for contracts below EU Thresholds?
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 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 1.708,60 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 1.708,60 euro but does not
exceed 8.543,01 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 8.543,01 euro but does not
exceed 85.430,07 euro, the contracting authority, if it chooses to use this mini

2
Analytical (step-by-step) presentation of each procurement procedure, as well as of the requirements
of each step, is given in Chapter 3.
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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 85.430,07 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
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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.




















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

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
accounts.
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.
Value of Contract
Between EURO
8.543,01 and
85.430,07 [*]
Between
1.708,60 and
8.543,01 EURO
Obtain written or verbal
quotes from competitive
supplier(s)
Send brief specification by email/fax
to a number of suppliers (at least
four) seeking written quotes
Select most suitable offer
Select lowest price / most
suitable
Evaluate offers objectively against
specified requirements (using a
scoring sheet)
Notify / debrief unsuccessful bidders
Less than
1.708,60
EURO
Direct Award
Between
85.430,07 EURO
and EU
thresholds
[*] According to the article 84(1) of
the Law .12()/2006
The procedures presented in
Figure 2-2 apply also in this
case. The only difference
here is that the publications/
announcements to the OJEU
are not mandatory
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2.5.6 What needs to be considered when advertising a tender?
It is important when making decisions on the advertising of contract notices that it is carried
out in such a way as to enable the market to be opened up to competition. Therefore, the
only way that the requirements laid down by the ECJ can be met is by publication of a
sufficiently accessible advertisement in sufficient time to respond by tender.

An advert should contain the following basic elements.
Table 2-11: Basic contents of a procurement advert
Awarding Body - State the awarding body which may also include a partner
organisation or funding contributor.
Project Description A brief explanation of what is required
Timeframes Project start dates, completion dates and duration.
Environmental issues Only include as part of the advert if they are key issues to the
success of the project and it requires specific expertise.
Otherwise put it in as part of the Terms of Reference.
Experience/Qualifications
Required for the
Contract
By placing these requirements in the advert only those
applicants who can satisfy them will bother applying for
example, contracting authorities may require a contractor to
have at least 3 years experience in building major road
infrastructure in order to bid for the development of a
motorway between Paphos and Nicosia.
Close - This will normally include both the day and time when the
completed tender needs to be with the awarding body.
Contact This may be in the form of a specified person or a more
general departmental contact.

The EU must be promoted under any projects funded or partially funded by EU
programmes. Please refer to the Regulation for the Information and Publicity of the
Structural Funds.
Notices are published at three stages in the tendering process, as follows:
Prior Indicative Notice (PIN)
A PIN is an early warning mechanism to inform suppliers that contract notices will be
forthcoming. It is most appropriate when it is issued at the beginning of a year or well in
advance of any tendering activity (such as project feasibility stage) because at least 52 days
must elapse between a PIN and the issue of a tender. The notice gives essential project
characteristics of a prospective contract to be let in the coming 12 months.
Publication of a PIN in the OJEU assists a contracting authority to be more
transparent and also enable suppliers to prepare in advance of forthcoming contacts. It
also enables contracting authorities to have shorter timescales for the return of expressions
of interest or tenders.
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Contract notice
Where open tendering is used, the notice acts as an invitation to participate in the tendering
process. Where restricted tendering is being used, the notice gives suppliers an opportunity
to submit an expression of interest. This is often followed by the issue of a Pre Qualification
Questionnaire that is evaluated to produce a restricted list of suppliers for tender. The time
limit allocated for this notice varies according to tendering methods and procedures chosen.

Contracting authorities can use the following commonly used means of publication.
Official Journal of the European Union/TED (Tenders Electronic Daily) -
Publication in the Official Journal is mandatory when projects are above the EU
thresholds and not mandatory for small value contracts.
Gazette of the Republic of Cyprus- Publication in the Gazette is mandatory when
projects involve the open or restricted procedures and not mandatory for small
value contracts using the simplified procedure.
The Internet - The wide availability and ease of use of the World Wide Web makes
contract advertisements on websites far more accessible, especially for
undertakings from other Member States and for SMEs looking for smaller
contracts.
National journals specialising in public procurement announcements, newspapers
with national or regional coverage or specialist publications.
Local publications - Contracting entities may still use local means of publication
such as local newspapers, municipal announcement journals or even notice
boards. However, such means ensure only strictly local publication, which might be
adequate in special cases, such as very small contracts for which there is only a
local market.
It is important when planning a procurement project to ensure that contracting authorities
effectively advertise in the appropriate press in order to maximize the potential levels of
competition. In certain specialist areas this may require advertisements to be placed in trade
journals, etc.
All contracts at or above the EU thresholds (exclusive of VAT) must be advertised in
the OJEU and the Gazette of the Republic of Cyprus. In certain occasions it would be
advisable to also advertise in the specialist press; e.g. Construction Journals etc. These
could be both local and global depending on the nature of the project and the market
assessment.
If a contract value is below the mandatory thresholds you may still place a voluntary advert
on the OJEU.
OJEU are obliged to publish your advert within 12 days. If you also decide to publish in other
sources (such as a website or the national press or trade magazines) you must not
send your advert to the other publications before OJEU
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provide information or details in the other advert that is not included in the OJEU
advert.
Contract award notice
The contract award notice must be published for all contracts awarded under the Directive.
The Notice gives details about the award, the contract value and the successful contractor or
consultant. It has to be issued within 48 days of the contract being awarded.
For cases above the EU thresholds there are certain EU templates for PIN, contract
notice and contract award notice that should be used. These can be found at
www.simap.eu.int/forms .
2.5.7 What is an acceptable procurement timetable?
A procurement timetable should be produced for all major procurement exercises. It is the
responsibility of the Procurement Manager to set the timetable and it should set out all the
key stages in the procurement process, as well as the length of time expected for each
stage. The timetable should be determined at the outset of the procurement process and
should take into consideration the availability of all the key members of the procurement
team.
It should be noted that the timescale varies from project to project depending on its
complexity and the availability of each member of the procurement team. An
indicative outline timetable for an open procedure which can be used and adapted
appropriately by contracting authorities is provided below.
Table 2-12 : Sample procurement timetable for the open procedure
1 Budget approval Start Date
2 Establish Procurement Arrangements i.e. -a project
structure/timetable/Procurement/evaluation teams
1 week
3 Agreeing a procurement strategy and EU procedure (this could
set the timescales from this point in the planning process)
0.5 week
4 Drafting specification 1 week
5 Market assessment 1 week
6 Establish evaluation criteria 0.5 week
7 Preparing tender documentation including Terms of Conditions 1 week
8 Advertising the project (OJ/Local press etc)
9 Tender submission See Law N12 Chap.V Part
2 & note below
10 Tender evaluation 1-4 weeks
11 Decision to award/application of the time for appealing to the
Tenders Review Authority
2 weeks
12 Collection by the Contractor of all the required supporting
documents for the contract signature
1-3 weeks
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13 Contract signature date Tendering Process End
Date
An indicative outline timetable for a restricted procedure which can be used and adapted
appropriately by contracting authorities is provided below.
Table 2-13 : Sample procurement timetable for the restricted procedure
1 Budget approval Start Date
2 Establish Procurement Arrangements ie-a project
structure/timetable/Procurement/evaluation teams
1 week
3 Agreeing a procurement strategy and EU procedure (this could
set the timescales from this point in the planning process)
0.5 week
4 Drafting specification 1 week
5 Market assessment 1 week
6 Establish evaluation criteria 0.5 week
7 Preparing tender documentation including Terms of Conditions 1 week
8 Advertising the project (OJ/Local press etc)
9 Invitations to submit PQQ 1 week
10 PQQ submission See Law N12 Chap.V Part
2 & note below
11 PQQ evaluation 1 week
12 Invitations to tender (min of 5) 1 week
13 Tender submission See Law N12 Chap.V Part
2 & note below
14 Tender evaluation 1 week
15 Decision to award/application of the time for appealing to Tenders
Review Authority
2 weeks
16 Collection by the Contractor of all the required supporting
documents for the contract signature
1-3 weeks
17 Contract signature date Tendering Process End
Date
Using this information a timeline can be drawn, with responsibilities assigned for each activity
within the procurement team and supplier teams. This suggested approach gives an overall
timescale for the process and will enable the procurement to be managed efficiently and
effectively to achieve fast delivery.
The input of experts should be built into the timetable and diary dates given as soon as
possible. The above example shows an indicative total duration, however as stated,
this will depend on the size and complexity of the project, procurement procedure and the
process.
Time-limits for Replies - Minimum time-limits are set down for the different stages of
the particular contract award procedure chosen by the Legislation [Law N.12(I)/2006,
Title II Chapter V Part 2, Title III articles 83 and 84(c)(ii)]. In all cases, the times specified in
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days relate to calendar days. When fixing the timescale for submitting expressions of interest
/ requests to participate or tenders, contracting authorities should take account of the
complexity of the contract and allow sufficient time for submitting the necessary information
and preparing tenders.
The main minimum time-limits, which are defined from the date of dispatching the notice to
the OJEU, are as follows.
Open Procedure
for receipt of tenders: 52 days
if a PIN has been published: as a general rule the minimum time may be reduced
to 36 days but in no circumstances less than 22 days.

Restricted, Negotiated and Competitive Dialogue Procedures
for receipt of expressions of interest / requests to participate: 37 days;
for receipt of tenders under restricted procedures: 40 days from date of issue of
invitation to tender;
If a PIN has been published: as a general rule the minimum time for receipt of
tenders under the restricted procedure may be reduced to 36 days but in no
circumstances less than 22 days (no reduction in times for receipt of expressions
of interest).
Under a negotiated procedure or in competitive dialogue the time allowed for
receipt of tenders may be agreed between the parties involved.
Where genuine urgency renders these time limits impracticable, shorter time-limits may be
applied as follows
for receipt of expressions of interest, not less than 15 days from the date of
dispatching the notice and
For receipt of tenders, not less than 10 days from the date of issue of invitation to
tender.

The following provides a summary table for use by contracting authorities.
Table 2-14 : Timeframe for different procedures as set out in the EU Directives
Restricted Negotiated Open
Earliest date for last receipt of tenders from
date of despatch of OJEU Contract notice
No PIN
N/A N/A 52 days
As above if a PIN was published N/A N/A 36 days
Time from date of request to send contract N/A N/A 6 days
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documents
Earliest date for last receipt of requests to
participate (expression of interests) from
date of despatch of Contract Notice.
37 days 37 days N/A
As above in cases of urgency/accelerated
procedure
15 days 15 days N/A
Earliest date for last receipt of tenders from
date of despatch of invitation to tender. This
is likely to be after the evaluation of PQQs
40 days

N/A N/A
As above if a PIN was published 36 days N/A N/A
As above in cases of urgency/ accelerated 10 days N/A N/A

Electronic / online advertising: minimum times for responses may be reduced
where contract notices are transmitted electronically to the OJEU and all tender
documentation is made available electronically in accordance with the provisions of the
Directives. The reduction can be up to a cumulative 12 days, (7 days for contract notice and
5 days for provision of documents in electronic format), reflecting the potential for time saving
if up - to - date technological methods of communication and transmission are used at the
various stages of the process. Conditions for availing of these potential time reductions are
set out in Law N12, Title II Chapter V Part 2.
The use of the urgent procedures, or accelerated procedures, as referred to in the
Directives, must be justified and documented and have been caused by
unforeseeable events outside the control of the contracting authority. The EU Commission
and ECJ interpret urgency very strictly. Delay or inaction on the part of the contracting
authority is not sufficient reason for applying exceptional procedures. Unforeseeable
events in the Directives means events which fall outside the field of normal economic and
social activity, such as floods or earthquakes which necessitate urgent services to assist the
victims. It should also be noted that recourse to this procedure is permitted only to the extent
necessary to procure services necessary to deal with the immediate urgent situation. For
requirements after such a period, the contracting authority has sufficient time to publish a
contract notice and award a contract in accordance with normal procedures.

2.6 FRAMEWORK AGREEMENTS AND CALL-OFF ARRANGEMENTS
Frameworks are agreements to provide goods, works or services on pre-agreed specified
terms and conditions including price. Framework Agreement is a general term for
agreements with suppliers that set out the general terms and conditions under which specific
purchases (call-offs) can be made throughout the term of the agreement or can be used as
the bases for a secondary competition for a specific requirement to conclude a formal
contract. This section examines the critical questions of:
What are the stages of framework agreements?
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Why use framework agreements?
How is a call-off arrangement used?

2.6.1 What are the stages of framework agreements?
The initial agreements do not themselves create a legally binding contract, call-offs under
those arrangements do. It is therefore important for the agreement to set out the terms and
conditions of the contractual relationships that will arise from call-offs. There are two basic
steps that need to be followed in order to satisfy the needs of a Contracting Authority through
Framework Agreements:
Framework agreements, which contain no contractual commitment on either side
for the provision of any particular quantity. Although Framework Agreements
involve no commitment to purchase, they commonly specify the terms and
conditions of the eventual contract that will apply when goods, works or services
are purchased along with the rates that will be charged for that service or the
pricing mechanism to be used in order to define the price to be charged. These
agreements are normally concluded using the specific terms included in the
Framework Agreement for the award of the call off. Especially in case where more
than one potential supplier exists in the Framework Agreement, the call-off can be
awarded through a secondary competition.
Call Offs, which incorporate a contractual commitment to purchase a particular
volume or value of goods or services. These contracts are normally formed
through the placing of a specific purchase order for a quantity of goods or services
following the terms set out in the Framework Agreement, under which the call off is
made.
2.6.2 Why use framework agreement?
Framework Agreements offer a number of advantages for a contracting authority such as:
The vfm advantages of centralised procurement without the commonly associated
level of bureaucracy;
a single tendering exercise over the life of the arrangement;
a reduction in administrative effort and cost for the contracting authority;
the initial tendering process allows contracting authorities to identify competitive
suppliers, who should offer more competitive prices on the basis of an expected
value of business;
the agreed range for the supply of items or services can be given at short notice by
the contracting authority, therefore reducing or avoiding stock holding for goods,
and reducing down-time on equipment maintenance and repairs;
A mutually beneficial longer-term working relationship can be established with the
supplier.
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The benefits to the supplier include:
a longer term approach to business development planning
a longer term approach to planning, for example in terms of stock levels and
continuity of supply
A mutually beneficial longer-term working relationship can be established with the
contracting authority.
The following checklist outlines considerations contracting authorities should use when
considering using a framework agreement.
Table 2-15: Guidelines on when to use Framework Agreements
Action Y/N
Are you in a position to specify, in detail, the kinds of purchase you
require upfront, over the proposed life of the framework?

Does the purchase allow you to establish a competitive pricing
mechanism over the life of the framework?

Are you in a position to detail the scope and types of goods and/or
services that will be called-off?

Can you ensure that your obligations on equality and sustainability
etc. can be met?

If a contracting authority decides to use a framework approach then it must be
advertised in the OJEU if the estimated value, over the lifetime of the framework, is
higher than the EU thresholds. Under the new Directive the OJEU notice must:
Make it clear that a framework agreement is being awarded
Include the contracting authorities (users) entitled to call-off under the terms of the
agreement
State the duration of the framework agreement
Include the estimated total value of the goods and/or services for which call-offs
are to be placed.
2.6.3 Examples of when Framework Agreements are useful
Examples of when a framework agreement may be useful include:

S Su up pp pl li ie es s f fr ro om m a a
s si in ng gl le e p pr ro ov vi id de er r
This is used when a framework agreement is required by the
contracting authority for the supply of, for example, protective clothing
for maintenance staff. Following an open, OJEU, tendering process,
one supplier is appointed based on MEAT and the contracting authority
(user) calls- off the supply of the clothing for the period of the
framework, on the terms agreed. Examples include: specialist building
maintenance, road signs, protective clothing, plant & equipment,
Banking services
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S Su up pp pl li ie es s f fr ro om m
s se ev ve er ra al l p pr ro ov vi id de er rs s

This is used when a framework agreement is required for a number of
suppliers, for the supply of, for example, printing services. After an
open, OJEU, tendering process the MEAT bids are included on the
framework and the contracting authority and the specified users of the
framework go to the supplier within the framework whose offer is the
most economically advantageous based on the call-off criteria (which
are explicitly stated in the framework) required for the particular
contract in question. There is no need to go to mini competition.
Examples include: Consultancy Services, Advertising, Computer Hard
& Software, Printing, Legal Services
M Mi in no or r w wo or rk ks s This is used when a framework is required for a range of services
within a number of categories such as building plumbing and electrical
works. Variables such as hourly rates and/or call out charges are set
under the framework. After an open, OJEU, tendering process the
MEAT bids are included on the framework. When a call- off is required
a contracting authority and the users go to the supplier within the
framework whose offer is the most economically advantageous based
on the call- off criteria (which are explicitly stated in the framework)
required for the particular contract in question. There is no need to go
to mini competition. This type of framework arrangement allows minor
reoccurring works to be carried out at short notice.
M Ma aj jo or r w wo or rk ks s This is used when a framework is required for a major works
programme. After an open, OJEU, tendering process the MEAT bids
are included on the framework. When a call- off is required a
contracting authority goes to mini competition and bids are invited from
all suppliers meeting the requirement for the specific competition.
2.6.4 How is a Call-off arrangement used?
There are two options for awarding call-offs (individual contracts) under the frameworks:
Option 1
The terms of the framework agreement define precisely the way that the call-offs will
be awarded, so there is no need for the Contracting Authority or the users to carry out
a new tender procedure. In case where the agreement has been concluded with one
supplier, the users are able to purchase (place orders) directly. In case where the
agreement has been concluded with more than one supplier, the terms of the
framework agreement should define the precise way for selecting a supplier and
awarding the call-off without re-opening the competition.
A common use for call-off arrangements is for low value high volume commodities. For
example: the requirement for vehicle & associated parts, office stationary & consumables,
direct labour materials. Photocopying paper is a commonly used commodity in the public
sector and by placing the requirement on a call-off arrangement, along with specific levels of
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services, ensures suppliers hold sufficient stocks to meet the needs of the contracting
authority and the users.
In order to ensure value for money, the contracting authority should award the
contract to the supplier providing the best value for money on the basis of the
qualitative selection criteria, used. This assessment must be kept on file.

Option 2
Hold a mini competition When the terms laid down on the framework agreement is
not precise and where several suppliers within the framework can meet the
requirements, contracting authorities are obliged to undertake a mini competition.
Where a mini competition is held for a particular call-off following the terms of the
framework agreement, the contracting authority needs to allow all the suppliers on the
framework to compete for the specific project. Not all suppliers within the framework need to
be invited to compete (frameworks can cover a number of different supplies and services so
it is only necessary to consult the appropriate suppliers for the type of category being
considered).Within the framework structure there is no need to advertise for making a call-
off.
The award of an individual contract (under the umbrella of a framework agreement)
can only be made on the basis of the terms and conditions (including the pricing
mechanism) established in the framework agreement itself. No negotiation of price or the
pricing mechanism already established in framework can take place at the secondary stage.
The award criteria for these mini-competitions should be the same as the original framework
competition, for example:
quality/methodology and
Resources/costs.
The EU directive restricts the length of a framework agreement to a maximum of 4
years (the period within which the last call-off must be awarded) unless there are duly
justified exceptional circumstances.
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2.7 EVALUATION STRATEGY
The evaluation strategy should identify the key guidelines to be followed by the Contracting
Authority in order to ensure that it will select the most suitable Contractor who offers the best
solution that meets its needs. In terms of time, the determination of the evaluation strategy
follows the decision on the particular tender procedure to be applied (open / restricted /
negotiated procedure with or without publication of contract notice, competitive dialogue).
In determining an evaluation strategy that will fully comply with the requirements of the
institutional framework and will be appropriately adapted to the particular features of the
contract to be awarded, Contracting Authorities should:
Take into consideration the following issues, which will help them formulate a correct
evaluation strategy:
o The way in which the evaluation stages function and their linkage to the
tender procedure.
o The key principles which should govern the evaluation process.
o The method for determining the technical specifications of the contract scope.
Answer in succession the following questions, which will determine the evaluation
strategy:
o How should I describe the technical specifications?
o What criteria should I use to select suitable economic operators?
o What criteria should I use to award the contract?
o How should I staff the Evaluation Team?

How should I
describe the
technical
specifications?
What criteria
should I use to
select suitable
economic
operators?
What criteria
should I use to
award the
contract?
How should I
staff the
Evaluation
Team?
How should I
describe the
technical
specifications?
What criteria
should I use to
select suitable
economic
operators?
What criteria
should I use to
award the
contract?
How should I
staff the
Evaluation
Team?

Figure 2-4: Questions for formulating the evaluation strategy
2.7.1 Evaluation stages and their linkage to the tender procedure
Regardless of the particular tender procedure to be selected, the evaluation is organised in
two discrete stages:
A first stage involving the qualitative selection of candidates.
A second stage involving the appointment of Contractor and the award of the
contract.
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These two stages function in a different way, rely on the use of criteria of a different
nature, and are governed by different rules.
The first stage aims to screen candidates and allow participation in the tender
procedure only to those potentially capable of executing the contract, while the
second stage aims to award the contract to the tenderer who will offer the best and most
advantageous solution. Although there is no strict requirement for the two evaluation stages
to be separated in terms of time, they should nevertheless be clearly distinct from one
another.
The criteria to be used in the two stages should be fully differentiated:
The criteria of the first stage (qualitative selection stage) should focus on checking
the suitability of economic operators.
The criteria of the second stage (contract award stage) should be linked solely to the
scope of the contract to be awarded.
The conduct of these two discrete evaluation stages occurs in different phases of the tender
procedure, depending on whether the procedure chosen is the open or restricted one.
The criteria used in the qualitative selection stage are not allowed to be used as
contract award criteria.
The correspondence of the two evaluation stages to the phases of the tender procedure in
the case of negotiated procedures and of the competitive dialogue is presented in Chapter 5
of the Guide.
Open procedure
In the open procedure, the Contracting Authority informs economic operators via the contract
notice of the criteria it will use to conduct the two evaluation stages, and requests that they
include in their tenders specific data and information documenting their capability to fulfil and
meet the criteria chosen (qualitative selection criteria and contract award criteria) in the best
possible way.
At the next step, once the interested economic operators have submitted their tenders, the
Contracting Authority awards the contract using the award criteria, after checking the
fulfilment of the qualitative selection criteria.
The figure below presents the correspondence of the evaluation stages to the
tendering phases in the case of the open procedure.





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PREPARATION OF
TENDERS
Submission of data and
information documenting
fulfilment of the criteria
PREPARATION OF
TENDERS
Submission of data and
information documenting
fulfilment of the criteria
Definition of qualitative selection
and award criteria
CONTRACT NOTICE
Specification of data and
information to be submitted for
documenting fulfilment of the
criteria
CONTRACTING AUTHORITY ECONOMIC OPERATORS
Definition of qualitative selection
and award criteria
CONTRACT NOTICE
Specification of data and
information to be submitted for
documenting fulfilment of the
criteria
CONTRACTING AUTHORITY ECONOMIC OPERATORS
`
EVALUATION OF TENDERS
Check of the fulfilment of the
qualitative selection criteria
Evaluation of the tenders meeting
the qualitative selection criteria on
the basis of the award criteria
Identification of the tenders meeting
the qualitative selection criteria
Award of contract on the basis of
the award criteria
Qualitative selection stage
Contract award stage
`
EVALUATION OF TENDERS
Check of the fulfilment of the
qualitative selection criteria
Evaluation of the tenders meeting
the qualitative selection criteria on
the basis of the award criteria
Identification of the tenders meeting
the qualitative selection criteria
Award of contract on the basis of
the award criteria
Qualitative selection stage
Contract award stage

Figure 2-5: Correspondence of the evaluation stages to the steps of the open procedure
Restricted procedure
In the restricted procedure, the Contracting Authority informs economic operators via the
contract notice of the criteria it will use to conduct the two evaluation stages, and requests
that they include in their requests to participate specific data and information documenting
the fulfilment of the qualitative selection criteria.
At the next step, once the interested economic operators have submitted their requests to
participate, the Contracting Authority checks the fulfilment of the qualitative selection criteria
and invites the submission of tenders containing data and information on their capability to
meet the award criteria in the best possible way only from those economic operators who
have been found to satisfy the qualitative selection criteria. In the invitation for the
submission of a tender, the Contracting Authority must determine precisely the award criteria
that it shall use, if these had not been sufficiently specified in the contract notice. As a best
practice, it is recommended that the award criteria be specified in the contract notice phase,
where feasible.
Finally, after the prequalified (on the basis of the qualitative selection criteria) economic
operators have submitted their tenders, the Contracting Authority evaluates the tenders and
awards the contract on the basis of the award criteria.
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The figure below presents the correspondence of the evaluation stages to the tendering
phases in the case of the restricted procedure.
Definition of qualitative selection
criteria and of award criterion
CONTRACT NOTICE
REQUEST TO PARTICIPATE
Submission of data and
information documenting
fulfilment of the qualitative
selection criteria
EVALUATION OF REQUESTS
TO PARTICIPATE
Check of the fulfilment of the
qualitative selection criteria
Specification of data and
information to be submitted for
documenting fulfilment of the
qualitative selection criteria
Identification of the candidates
meeting the qualitative selection
criteria
CONTRACTING AUTHORITY ECONOMIC OPERATORS
Prequalification stage
Definition of qualitative selection
criteria and of award criterion
CONTRACT NOTICE
REQUEST TO PARTICIPATE
Submission of data and
information documenting
fulfilment of the qualitative
selection criteria
EVALUATION OF REQUESTS
TO PARTICIPATE
Check of the fulfilment of the
qualitative selection criteria
Specification of data and
information to be submitted for
documenting fulfilment of the
qualitative selection criteria
Identification of the candidates
meeting the qualitative selection
criteria
CONTRACTING AUTHORITY ECONOMIC OPERATORS
Prequalification stage

EVALUATION OF TENDERS
Evaluation of tenders on the basis
of the award criteria
Award of contract on the basis of
the award criteria
Contract award stage
Definition of award criteria
INVITATION TO TENDER
Specification of data and
information to be submitted for
documenting fulfilment of the award
criteria
Invitation is sent only to the
Economic Operators found to
meet the qualitative selection
criteria
CONTRACTING AUTHORITY ECONOMIC OPERATORS
PREPARATION OF
TENDERS
Submission of data and
information documenting
fulfilment of the criteria
EVALUATION OF TENDERS
Evaluation of tenders on the basis
of the award criteria
Award of contract on the basis of
the award criteria
Contract award stage
EVALUATION OF TENDERS
Evaluation of tenders on the basis
of the award criteria
Award of contract on the basis of
the award criteria
Contract award stage
Definition of award criteria
INVITATION TO TENDER
Specification of data and
information to be submitted for
documenting fulfilment of the award
criteria
Invitation is sent only to the
Economic Operators found to
meet the qualitative selection
criteria
CONTRACTING AUTHORITY ECONOMIC OPERATORS
PREPARATION OF
TENDERS
Submission of data and
information documenting
fulfilment of the criteria
PREPARATION OF
TENDERS
Submission of data and
information documenting
fulfilment of the criteria

Figure 2-6: Correspondence of the evaluation stages to the steps of the restricted procedure
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2.7.2 Key evaluation principles
The evaluation strategy to be selected should be driven by and adhere to the following
key principles:
Transparency. The evaluation procedure, the evaluation criteria and their relevant
significance, the method for marking the criteria, and the data and information to be
submitted by economic operators to document that they fulfil or meet these criteria,
should be made fully known to the interested economic operators through the
contract notice (or, in the case of the restricted procedure, through the invitation to
tender).
Non-discrimination. The choice of evaluation criteria should not in any way,
whether direct or indirect, result in discrimination (preference or exclusion) of
specific economic operators, but should instead offer to all interested parties the
opportunity to demonstrate their capability to fulfil and meet the evaluation criteria.
Proportionality. The evaluation criteria to be chosen and above all the minimum
level of capabilities to be set for a particular contract should be in direct proportion to
its scale, difficulty, complexity and importance.
Qualitative selection criteria should not be used as award criteria. The different
nature of the qualitative selection and contract award criteria, but also the different
purposes which they serve in the context of the evaluation procedure, impose the
need to avoid using the qualitative selection criteria as the individual criteria for
awarding the contract to the tenderer who has submitted the most advantageous
tender.
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2.7.3 Determination of Technical Specifications
Any evaluation strategy must begin with the project specification. The specification (or brief)
provides a description of what the contracting authority requires, and or what the supplier is
expected to tender for and, if successful, deliver. It should include performance targets or
criteria for goods, services or work acceptance. The specification should also provide bidders
with details of how the tender is to be objectively evaluated.
Preparing the specification is an essential step in the procurement cycle and is crucial to the
success of procurement. It will often determine how successful you are at acquiring the
goods and services required to the correct standard, on time, and within the value for money
framework.
The specification needs to strike a balance between giving enough information to be
certain that suppliers will offer what you need, and being flexible enough to allow a
supplier to submit a compliant, innovative, BVFM solution, that fully meets your business
needs. A specification should be unambiguous so that the product or service fully meets the
user's business needs, but not so explicit that it prevents or discourages the supplier from
proposing innovative solutions, or offering better value for money. It must be prepared using
language that is consistent and understood within the specific sectors in which the
procurement is required.
If you feel that you do not have the knowledge to create a specification then consider the use
of a specialist. It is quite often the case that an effective procurement team is a combination
of professional procurement specialists along with technical and financial experts.
The extent of the specification can vary from a few paragraphs to several pages and
should take account of the following:
estimated indicative budget
strategic importance
risks involved & possible transfer of risk
Complexity.
Innovation required
Availability of external standards
Potential life of the contract
If any one of the above issues is high it is likely that a more extensive brief or specification
will be required.
If the specification is wrong, inadequate or overtly explicit it may result in one or more
of the following:
a suitable bidder is precluded from bidding or submitting quotes
the requirements are wrongly or variously interpreted
tender submissions are unsatisfactory
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difficulty in evaluating bids
incorrect or unsuitable goods and services are offered/supplied
best value for money is not achieved
considerable costs and losses incurred
adverse publicity or a poor public image created
Delay in or non delivery of projects.

2.7.4 What types of specifications can be used?
There are three basic approaches to the development of a specification as outlined below.
Input or process specifications
This specification is process based and is usually used when procuring services where
certain processes need to be adopted. For example if a contracting authority requires a back
to employment training programme for 16-23 year olds, although the training content may
not be prescribed, the specification may state that training should be delivered in such a way
that is accessible to people with disabilities. Alternatively, if a contracting authority requires a
management development and training programme for senior officers it may specify the type
of training to be delivered such as case studies, role play and so on.
Output or performance specifications
It is normal practice to use output specifications were you believe the sector can offer a
innovation, creativity, additional value added services within the bid or the client is not clear
what is available within the market place, examples include ICT systems, advertising
campaigns and so on. An example might include the requirement for a contracting authority
to have a network security system designed and implemented where the specification leaves
it open for the bidder to suggest how this will be achieved. With the construction of works
output specifications are normal practice when the client wants an integrated approach to the
delivery of a project e.g. design, build, and operate solution. Under these circumstances it
would be undesirable to limit the innovation of potential suppliers solutions to a detailed
specification.
Technical design specifications
The use of technical specifications is limited to markets were there is a very precise business
need or statutory requirement, for example, the maintenance of specialist equipment in
buildings such as lifts, heating , air conditions etc. It is essential under these types of
contracts that suppliers are clear on their legal and statutory requirements.
The following tables outline the Advantages and Disadvantages of different
methodologies that need to be considered by contracting authorities
Table 2-16: Advantages and disadvantages of input specifications
Advantages Disadvantages
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Suppliers are clear on the inputs
required by the contracting authority;
The contracting authority is able to
determine the processes used in the
delivery of the contract
The contracting authority can specify
inputs that can more easily be
monitored.
Contracting authority has more control
over the processes used to achieve the
outputs
The specification documentation
generally requires more effort to produce
Suppliers have less opportunity to show
innovation in their approach to the
contract
The inputs set out in the specification
need to be well researched to ensure
they are the most economically
advantageous option to reach the
objectives of the contract
Table 2-17: Advantages and disadvantages of output specifications
Advantages Disadvantages
Suppliers have greater opportunity for
innovation, as they are free to offer
solutions that in their view best meets
the specification;
The specification documentation requires
less effort to produce;
There is more opportunity to pass risk
onto the supplier, as they have
responsibility for the way the
specification is met;
The contracting authority can specify
outputs that can easily be monitored.
There is likely to be a wider choice of
suppliers
Generally requires a more proactive
approach to monitoring
May make evaluation more difficult as
one may end up comparing apples and
oranges with a wide variety of prices. In
these circumstances, contracting
authorities will require more complex
evaluation criteria.
May not be happy with the process used
to achieve the outputs (this can be
alleviated by adding the most important
processes into the specification)
Table 2-18: Advantages and disadvantages of Technical Specifications
Advantages Disadvantages
With prescriptive specifications there is
little scope for misunderstanding.
Evaluation should be more
straightforward as price can be a greater
deciding factor.
Emphasises critical requirements
Technical specifications may take longer
to prepare
Discourages innovation.
Puts more risk on the contracting
authority. If specification is incorrect
contracting authority will have to pay for
variations
Greater chance of over-specifying and
therefore increasing the price
unnecessarily.
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2.7.5 What criteria should I use to select suitable
economic operators?
This paragraph, after an analysis of the nature, characteristics and functioning of the criteria
for selecting suitable economic operators, will discuss the issues to be addressed in the
evaluation strategy formulation phase and will provide guidelines to assist the adoption of
appropriate choices. Finally, guidelines and instructions will be given concerning how to
make use of the possibility to limit the number of suitable candidates to be invited to tender
under the restricted procedure.
Nature, characteristics and functioning of the qualitative selection criteria
The purpose of the qualitative selection stage is to check the suitability of economic
operators. This check is performed using criteria which must concern the personal
situation and characteristics of candidates or tenderers.
Qualitative selection criteria can be grouped in 4 categories. These categories are defined in
Law 11(I)/2006 and Law 12(I)/2006, and include criteria concerning:
1. the personal situation of the candidate or tenderer (exclusion criteria)
2. the candidates or tenderers suitability to pursue professional activity (exclusion
criterion)
3. the economic and financial standing of the candidate or tenderer
4. the technical and/or professional ability of the candidate or tenderer.
The individual criteria under each category are detailed in a following paragraph.
The above criteria categories are not indicative but exhaustive, and the suitability of
candidates or tenderers may be examined only by using qualitative selection criteria that
belong to one of these 4 categories.
The individual criteria under all of these four categories are of the type YES/NO, i.e. they
lay down conditions/requirements the fulfilment of which economic operators must establish
by producing appropriate documents, data or information. The outcome of the examination
by the Evaluation Team of whether a particular criterion is fulfilled is positive (YES) if the
data submitted by the economic operator is found to document the fulfilment of the conditions
set for the corresponding criterion, otherwise the outcome is negative (NO).
The qualitative selection criteria do not offset one another: in order for an economic
operator to be selected as suitable, the outcome of the examination of that economic
operators qualifications must be positive (YES) in all of the qualitative selection criteria
specified for the particular tender.
The qualitative selection criteria may be given marks and may be used for ranking
candidate economic operators in the case of the restricted procedure, with a view to
limiting the number of candidates to be invited to tender.
The individual criteria in the four categories function in two different ways:
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The nature of the individual criteria under categories 1 and 2 is such (exclusion
criteria) that the Contracting Authority need only to select those which are more
appropriate in each case, without having to also set minimum levels. For example, if
the criterion of category 2 is selected, then it is enough to mention that candidate
economic operators must prove their enrolment on a professional or trade register; or,
if the criterion selected from category 1 is the criterion of fulfilment of social security
obligations, then it is enough to mention that candidate economic operators must
prove the fulfilment of their obligations relating to the payment of social security
contributions in accordance with the legal provisions of the country where they are
established.
The nature of the individual criteria under categories 3 and 4 is such that a good
practice for the Contracting Authority, after first deciding on which criteria to select
depending on the particular case, would be to also decide the specific minimum
capability levels that it will require for each one of the selected criteria. For example, if
the Contracting Authority selects from category 3 the criterion of overall turnover, then
it should also specify the minimum turnover required in order for economic operators
to qualify as suitable; or, if the Contracting Authority selects from category 4 the
criterion of similar projects which have been carried out in the past, then it should
decide the minimum number of projects that it will require in order for economic
operators to qualify as suitable.
Definition of the evaluation strategy for the qualitative selection stage
The issues to be addressed at the level of formulation of the evaluation strategy are the
following:
Selection of the criteria categories to be used for qualitative selection.
Selection of the specific criteria to be used from each category selected.
Decision on whether to make use of the possibility to limit the number of suitable
candidates to be invited to tender (applies only in cases where the tender procedure
chosen is the restricted procedure).
To conclude the planning of the qualitative selection stage, two additional issues must be
addressed:
Definition of the minimum capability levels to be set for the criteria selected under
categories 3 and 4.
Specification of the data, documents and other information to be requested from
economic operators to document the fulfilment of the requirements of the selected
criteria.
This last issue is not a strategic decision and it is recommended to be addressed in the
context of the tender documents preparation phase, by the Procurement Team. As regards
the issue of determining the minimum capability levels, this is also recommended to be
examined in the context of the tender documents preparation phase, without however
excluding cases where, due to the crucial nature of the project being put out to tender, the
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Contracting Authority may consider this issue to be of strategic importance. Instructions on
how to address these two issues are given in Chapter 3 of the Guide.
In what in particular regards the case of the restricted procedure, and if the decision is taken
to make use of the possibility to limit the number of candidates to be invited to tender, then to
conclude the planning of the prequalification stage two additional issues must be addressed:
Definition of the maximum number of candidates to be invited to tender, and
Definition of the criteria to be used for limiting the number of candidates.
These two issues will be examined in the context of the tender documents preparation
phase. Instructions on how to address them are given in Chapter 3 of the Guide.
The figure below presents all the decisions which must be taken for planning the qualitative
selection stage, and indicates the level at which they are taken.
Which categories
of qualitative
selection
criteria should
I use?
Which criteria
should I use
from each
selected
category?
Should I limit
the number of
candidates
to be invited to
tender?
What will be the
minimum levels
for the criteria
under categories
3 and 4?
What information
should I require
from
economic
operators?
Decisions at the level of
formulation of the evaluation
strategy
Decisions at the level of
preparation of the tender
documents
What should be
the maximum
number of
candidates to be
invited to tender?
Which criteria
should I use
to limit the
number of
candidates?
Only in the case of
the restricted
procedure
How should I
describe the
technical
specifications?
What criteria
should I use to
select suitable
economic
operators?
What criteria
should I use to
award the
contract?
How should I
staff the
Evaluation
Team?
How should I
describe the
technical
specifications?
What criteria
should I use to
select suitable
economic
operators?
What criteria
should I use to
award the
contract?
How should I
staff the
Evaluation
Team?

Figure 2-7: Decisions of the qualitative selection stage and level at which they are taken
Selection of qualitative selection categories and criteria
The following Tables provide guidelines to assist Contracting Authorities in their
decisions regarding the categories and the individual criteria under each category,
which they will have to select in each case.
Table 2-19: Guidelines on the selection of criteria regarding the personal situation of the
candidate/tenderer
FACTORS AFFECTING THE
DECISION TO USE THE CRITERIA
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CRITERIA CATEGORY 1:
PERSONAL SITUATION OF THE
CANDIDATE/TENDERER
(EXCLUSION CRITERIA)
Use of this criteria category is considered
necessary in all cases, as it protects the
Contracting Authority from awarding contracts to
economic operators who are guilty of grave
professional misconduct or have not fulfilled
important obligations or are having serious
problems with their business activity.
Individual Criteria under Category 1
Absence of a final judgement against the economic operator for:
Participation in a criminal organisation, as defined in Article
2(1) of Council Joint Action 98/733/JHA.
Corruption, as defined in Article 3 of the Council Act of 26
May 1997 and Article 3(1) of Council Joint Action
98/742/JHA, respectively.
Fraud within the meaning of Article 1 of the Convention
relating to the protection of the financial interests of the
European Communities.
Money laundering, as defined in Article 1 of Council
Directive 91/308/EEC of 10 June 1991 on prevention of the
use of the financial system for the purpose of money
laundering, as amended by Directive 2001/97/EC of the
European Parliament and of the Council..
According to Law 11(I)/2006 and
Law 12(I)/2006, fulfilment of these
criteria is mandatory.
Any economic operator must not:
Be bankrupt or in the process of being wound up, have his
affairs administered by the court, have entered into an
arrangement with creditors, have suspended business
activities or be in any analogous situation arising from a
similar procedure under national laws and regulations.
Be the subject of proceedings for a declaration of
bankruptcy, for an order for compulsory winding up or
administration by the court or of an arrangement with
creditors or of any other similar proceedings under national
laws and regulations.
Have been convicted by a judgment which has the force of
res judicata of any offence concerning his professional
conduct.
Have been guilty of grave professional misconduct proven
by any means which the contracting authorities can
demonstrate.
Have failed to fulfil his obligations relating to the payment of
social security contributions in accordance with the legal
provisions of the country in which he is established or with
those of the Republic of Cyprus.
Have failed to fulfil his obligations relating to the payment of
taxes in accordance with the legal provisions of the country
in which he is established or with those of the Republic of
Cyprus.
Be guilty of serious misrepresentation in supplying the
information required under this Section or have failed to
supply such information.
According to Law 11(I)/2006 and
Law 12(I)/2006, use of these
criteria is not mandatory but
optional.
It is recommended that these
criteria be used in all cases of
tender procedure, as they protect
Contracting Authorities from
entering into agreement with
economic operators who are
having serious problems with their
business activity and professional
conduct and are not able to meet
key financial obligations, resulting
in doubts being raised as to their
reliability and their capability to
carry out public contracts.
Finally, the use of these criteria
contributes to maintaining healthy
competition.
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Any economic operator is excluded in any stage of the tender
procedure, if the competent evaluation body establishes that the
economic operator:
Is attempting or seeking, whether in person or through the
mediation or assistance of some other person, to influence
in any way the judgement of any collective organ or
committee or member thereof, or of any public employee or
official in the performance or discharge of their duties or
authorities as per the Law or the relevant regulations.
Has obtained or taken in his possession, without legal
authority and at his own initiative, information or documents
of a secret nature in connection with a tender procedure
where his is participating.
Their use contributes to
establishing a climate of
transparency and reliability.
It is recommended that these
grounds for exclusion included in
the general principles of the
tender procedure, as they must
apply throughout the tender
procedure period, rather than in
the qualitative selection criteria,
which are checked at a specific
point during the tender procedure.
Table 2-20: Guidelines on the selection of the criterion regarding the candidates/tenderers
suitability to pursue professional activity
CRITERIA CATEGORY 2:
SUITABILITY TO PURSUE PROFESSIONAL ACTIVITY
(EXCLUSION CRITERION)
Individual Criteria under Category 2
FACTORS AFFECTING THE DECISION TO
USE THE CRITERIA
Enrolment on a professional or trade
register.

(Annexes VIIIA, VIIIB VIIIC of Law
12()/2006 specify the professional or trade
registers in each Member State for public
works contracts, public supplies contracts
and public services contracts, respectively).
According to Law 12(I)/2006, use of this criterion is
optional.
It is recommended that this criterion be used in cases
where enrolment of economic operators on a
professional or trade register may also serve as a
criterion of their technical and professional ability e.g.
in the case of public works contracts, enrolment in a
specific class under a category of projects at the
Council of Registration and Control of Buildings and
Civil Engineering Constructors, or at the Register of
Contractors in Greece.
In connection with public supplies contracts and public
services contracts no special registers exist in Cyprus,
therefore the selection of this criterion would be
meaningful for economic operators established in other
Member States.
If this criterion is intended for use simply as proof of
lawful establishment of economic operators, then it
may be replaced equally well by the documents, as
applicable in each case, serving as official proof of
establishment of the operators.
Table 2-21: Guidelines on the selection of criteria regarding the economic and financial
standing of the candidate/tenderer
FACTORS AFFECTING THE DECISION
TO USE THE CRITERIA
CRITERIA CATEGORY 3:
ECONOMIC AND FINANCIAL
Use of this criteria category is considered
necessary in most cases, as it protects the
Contracting Authority from awarding contracts to
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STANDING

economic operators whose volume of activities
does not correspond to the size of the contract
being put out to tender and/or whose financial data
do not guarantee the successful completion of the
project.
Use of this criterion may not be necessary in cases
of contracts for common supplies or of supplies and
services contracts with a low budget.
Individual Criteria under Category 3
Overall turnover.
Depending on the particular case, the criterion
selected may be that of the overall turnover of
economic operators or that of the turnover in
activities similar to those of the contract being
put out to tender.
This last solution may be selected when the
contract scope is so highly specialised so as to
result in a serious probability of the overall
turnover of candidate economic operators
being shaped to a large extent by other
activities of little to minimum relevance to the
scope of the contract being put out to tender.
Use of this criterion allows Contracting Authorities
to match easily the size of the contract being put
out to tender with the volume of activities of
interested economic operators, and to ensure that
the candidate economic operators do not rely on
the particular contract for their survival.
Use of this criterion is recommended in most cases,
with the possible exception of public contracts for
simple supplies or of low-budget public contracts
for general services.
Attention should be paid when using this criterion
(the turnover volumes required should not be
disproportionately high in relation to the size of the
contract), to avoid the risk of placing undue barriers
to SMEs.
Operating Results. Use of this criterion allows Contracting Authorities
to form an opinion about the viability of candidate
economic operators, by assessing their profitability.
Use of this criterion is recommended in cases of
large projects (in terms of implementation duration
as well as in terms of budget), given that in such
cases the need to assess the financial viability of
the contractor in order to safeguard the projects
successful completion is more imperative.
Cash and cash equivalents at the year-end. Use of this criterion allows Contracting Authorities
to form an opinion about the viability of candidate
economic operators, by assessing their liquidity.
Use of this criterion is recommended in cases of
large projects (in terms of implementation duration
as well as in terms of budget), given that in such
cases the need to assess the financial viability of
the contractor in order to safeguard the projects
successful completion is more imperative.
Various liquidity and financial structure indices,
depending on the specific case.
These may be used in cases of important large
projects, where Contracting Authorities may wish to
limit suitable candidates only to those for whom
short-term and long-term financial stability may be
substantiated.
Table 2-22: Guidelines on the selection of criteria regarding the technical and professional
ability of the candidate/tenderer
FACTORS AFFECTING THE DECISION
TO USE THE CRITERIA
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CRITERIA CATEGORY 4:
TECHNICAL AND PROFESSIONAL
ABILITY

Use of this criteria category is considered
necessary in most cases, at it protects Contracting
Authorities from awarding contracts to economic
operators who do not possess the required
experience, means and infrastructure to carry them
out successfully.
Individual Criteria under Category 4
Experience in the implementation of projects
with a scope which is of relevance to the scope
of the contract being put out to tender.

This is the most important criterion for assessing
the technical and professional ability of candidate
economic operators, and its use is recommended
in all cases, with the possible exception of simple
or low-budget supply contracts.
Experience of Project Team members. This is an important criterion for checking the
suitability of candidate economic operators, mainly
in cases of public works contracts and public
services contracts where human resources largely
shape the technical and professional ability of
economic operators and determine in principle their
capacity to carry out the contract successfully.
In contrast, in the case of public supplies contracts
the importance of this criterion diminishes
significantly.
Number of personnel employed.
Depending on the particular case, this may
refer to all personnel or to the personnel in
particular specialisation areas of relevance to
the scope of the project being put out to tender.
This criterion aims to check the suitability of
candidate economic operators mainly in cases of
public works contracts and public services
contracts where implementation requires a large
Project Team.
Requirements regarding the suitability of
products, technical equipment, equipment and
means of study and research, organisation and
staffing of technical bodies, machinery,
facilities and other infrastructures.
This criterion can be further specified in terms of
detailed requirements in cases of special contracts,
such as e.g. public harbour works contracts where
the availability of relevant specialised equipment is
considered necessary.
Compliance with quality assurance standards. This criterion is a serious indication of the
effectiveness of the measures taken by economic
operators to ensure the quality of their activities.
Contracting Authorities may use this criterion in
cases of particularly important and complex
contracts.
Compliance with environmental management
standards.
This criterion should be used in cases of contracts
whose implementation might pose a risk to the
environment, thus necessitating the adoption of
measures to protect the environment during their
implementation. An example of such a specific
environmental management measure would be a
contract for the construction of a bridge in a
protected area, which would require a series of
specific environmental management measures to
be determined, aimed at ensuring the effective
protection of the indigenous flora and fauna during
the construction of the bridge.
Where tenders are submitted by consortia formed by economic operators, the
personal situation criteria must be fulfilled by each individual member of the
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consortium, whereas the economic and financial standing criteria and the technical and
professional ability criteria must be fulfilled jointly by the consortium members.
As regards the fulfilment of the economic and financial standing criteria and the
technical and professional ability criteria, an economic operator may in general or for
a particular contract rely on the capacities of other entities, regardless of the legal nature of
the links it has with them.
Restricted procedure: Limiting the number of suitable candidates to be invited to
tender
In the restricted procedure, the Contracting Authorities must indicate in the contract notice
the minimum number of candidates they intend to invite to tender, while they also may, if
they so deem necessary, to also indicate the maximum such number of candidates.
The minimum number of suitable candidates to be invited to tender is five (5).
Similarly, where a Contracting Authority chooses to limit the number of suitable
candidates that it will invite to tender, then this number may not be less than five (5).
If the Contracting Authority chooses to limit the number of suitable candidates to be invited to
tender and the number of candidates meeting the specified qualitative selection criteria is
higher than the maximum predetermined such number, then the suitable candidates are
selected based on their ranking according to their performance in one or more of the
qualitative selection criteria. Detailed guidelines on the way in which the number of suitable
candidates may be limited are given in Chapter 3.
The decision on whether or not to limit the number of suitable candidates to be invited
to tender should be taken after carefully considering the advantages and disadvantages
as these apply in each case. The Table below is an easy-to-use tool to assist Contracting
Authorities in taking this decision.
Table 2-23: Advantages and disadvantages of limiting the number of candidates to be invited to
tender in a restricted procedure
DECISION TO LIMIT THE NUMBER OF CANDIDATES TO BE INVITED TO TENDER
UNDER A RESTRICTED PROCEDURE
Disadvantages Advantages
Diminished competition, which may result in:
Relatively higher prices being offered.
A higher likelihood of lack of tenders or of
submission of a few tenders only, leading
to a high risk of cancellation of the tender
procedure.

Facilitation of the procedure of evaluation of
tenders at the contract award stage (advantage to
the Contracting Authorities).
This facilitation concerns both:
The shortening of the time that will be
required for conducting the evaluation, and
The reduction of the workload to levels that
will lead to improved evaluation results, in as
much as the Evaluation team will have to
examine a reasonable number of tenders.
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Securing higher probability of awarding the
contract to the economic operators to be invited to
tender (advantage to the interested economic
operators), a prospect which is expected to
encourage candidates to prepare better tenders in
terms of technical content.
N.B.:
The relative importance of the two advantages above against the disadvantage of diminished
competition increases in direct proportion to the nature of the contract being put out to tender
being such as to require complex and complicated technical solutions.
Where the contract is to be awarded using the criterion of the lowest price, the risk of
comparatively higher prices being offered increases if the number of candidates to be invited to
tender is limited.
2.7.6 What criteria should I use to award the contract?
The award of the contract takes place after the evaluation of the tenders submitted by the
suitable candidates, i.e. by the candidates meeting the qualitative selection criteria.
Alternatively, the evaluation of tenders at the contract award stage may only take place
using one of the following two criteria (award criteria):
Most economically advantageous tender (MEAT).
Lowest price.
In the event that the criterion chosen is that of the MEAT, the individual criteria to be used in
identifying the most advantageous tender should be then specified.
These individual criteria must be linked solely to the scope of the specific contract and,
depending on the particular case, may refer to the following:
Price
Quality
Aesthetic and functional features
Efficiency
After-sales service
Technical assistance
Date of delivery
Environmental performance
Lifecycle cost, etc.
A good practice for evaluating tenders in order to select the most economically
advantageous tender is that of the two-stage evaluation process (technical evaluation and
financial evaluation). In this case, the selection of the most economically advantageous
tender takes place through the following steps:
Technical evaluation, during which marks are given to the technical merit of tenders
on the basis of individual criteria (other than those related to the price offered). The
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definition of the individual criteria and their relative weights must be included in the
tender documents.
Financial evaluation, during which the relative cost of each tender relative to the
lowest price offered is calculated.
Final ranking of tenders, established on the basis of the aggregate marks of tenders
as these result from weighting the technical value (technical evaluation mark) against
the price offered (relative cost) for each tender. The weighting factor to be used for
weighting the technical value against the price offered must be defined in the tender
documents.
The following example explains the way in which the two-stage evaluation process is
used to select the most economically advantageous tender.
Example 2-3: Using the two-stage evaluation process for selecting the most economically
advantageous tender
Step 1: Technical evaluation
The Table below presents the criteria chosen and their corresponding weighting factors.
The weighting factors for all criteria are expressed as per cent rates and thus they add up to 100.
Each criterion is given a mark ranging from 80 to 120 (supplies contract), with the following rationale:
A mark of 100 is given in cases where all the requirements of the Tender Documents
regarding the particular criterion are fully met.
The mark given may be increased up to 120 in cases where all or some of the requirements
of the Tender Documents are more than fully met.
The mark given may be lowered down to 80 in cases where the requirements of the Tender
Documents are not fully covered, provided that the Tender has been considered acceptable
and the deviations have been considered minor.

Evaluation Criteria
Weighting
factor (%)
(1)
Criterion
mark
(2)
Weighted
mark
(3)=(1)(2)
Criterion 1 20 85 17
Criterion 2 35 110 38.5
Criterion 3 45 100 45
Total technical evaluation mark () 100.5

Step 2: Financial evaluation
For marking financial offers, the relative cost C of each Tender is calculated as follows:
Financial Offer of the Lowest Bidder
C = ------------------------------------------------------------------- x 100
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Evaluated Financial Offer
where the Evaluated Financial Offer is the total amount for which the Tenderer intends to carry out the
contract, and the Financial Offer of Lowest Bidder is the price of the tender with the lowest financial
offer.
If the lowest price is 300,000, then a tender with a price of 320,000 will be marked as follows:
= {(300,000) / (320,000)} 100 = 93,75
The financial offer of the lowest bidder is given a mark of 100.

Step 3: Final ranking of tenders
Finally, the Tenders are ranked in decreasing order of their aggregate mark L, obtained by applying
the formula below:
L = * n + C * (1-n)
where:
= the tenders technical evaluation mark
C = the relative cost of the financial offer
n = the weighting factor used to weight the technical value of the contract against the price offered.
In the above example, if the weighting factor chosen is 80%, then the final mark is:
L = (100.5 0.80) + (93.75 0.20) = 99.15
In concluding, the decisions concerning the planning of the contract award stage which the
Contracting Authorities should take at the level of formulation of the evaluation strategy are
the following:
Selection of award criterion.
Weighting of the technical value of the contract against the price offered (only in
cases where the award criterion chosen is that of the most economically
advantageous tender).
Whereas the decisions proposed to be taken during the tender documents preparation phase
are the following:
Selection of individual award criteria (only in cases where the award criterion chosen
is that of the most economically advantageous tender).
Selection of weighting factors for the individual criteria (only in cases where the award
criterion chosen is that of the most economically advantageous tender).
Instructions on how to address these two issues are given in Chapter 3 of the Guide.
The figure below presents all the decisions which must be taken for planning the contract
award stage, and indicates the level at which they are taken.
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Which award
criterion
should I
select?
How should I weight
the technical value
of the contract
against the price
offered?
What should be the
individual criteria
for identifying the
most advantageous
tender?
What should be
the weightings
of the individual
criteria?
Decisions at the level of
formulation of the evaluation
strategy
Decisions at the level of preparation
of the tender documents
Only in the case of the most economically
advantageous tender
How should I
describe the
technical
specifications?
What criteria
should I use to
select suitable
economic
operators?
What criteria
should I use to
award the
contract?
How should I
staff the
Evaluation
Team?

Figure 2-8: Decisions of the contract award stage and level at which they are taken
Selection of award criterion
Contracting Authorities may award public contracts following an open, restricted or
negotiated procedure (with or without publication of a contract notice), using only two
alternative criteria:
The most economically advantageous tender
The lowest price.
If the procedure selected is the competitive dialogue, the contract may be awarded only to
the most economically advantageous tender. The decision on the selection of the most
suitable award criterion depends mainly on the way in which the scope of the contract to be
awarded will be described in the tender documents.
Public contracts whose scope is detailed in a binding manner in the tender documents
do not allow candidate economic operators to plan different solution proposals, which
would justify the need for evaluating their technical merit in order to select the best tender
using the criterion of the most economically advantageous tender. In such cases, selection of
the lowest price as the award criterion seems to be the best solution.
Therefore, when deciding on the method to be used for developing the technical
specifications and during their actual development, we should always keep in mind that
these decisions will greatly influence the selection of the award criterion. As a general rule,
we can say this: the more significant the opportunity provided to economic operators to
influence through their tenders the planning and the results of the project, the more attractive
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the criterion of the most economically advantageous tender becomes compared to the
criterion of the lowest price.
The Table below presents typical examples regarding the use of the two award
criteria.
Table 2-24: Examples of using the two award criteria
Public works contracts
Use of the lowest price as the award criterion is a common and good practice for works which are put
out to tender after their corresponding detailed designs have been developed.
In contrast, in the case of works put out to tender as design-built contracts or of works put out to
tender as lump-sum contracts that make no use of bills of quantities and rely on output-focused
specifications, the criterion of the most economically advantageous tender seems to be the best
practice.
Public supplies contracts
A common practice in public supplies contracts is to use the criterion of the lowest price, as in most
cases Contracting Authorities are in a position to know precisely what products they need and to
provide detailed descriptions of their features.
The criterion of the most economically advantageous tender would be a good practice in cases
where the Contracting Authority decides to specify the minimum requirements for all or some of the
key features of the products it intends to procure, so as to allow candidate economic operators to
differentiate their tenders by offering products with superior features. The Contracting Authority may
also allow candidate economic operators to differentiate their tenders in terms of the delivery time.
Finally, in the case of public supplies contracts that involve significant and specialised product
installation and/or maintenance and/or user training activities, a good practice is to award these
contracts using the criterion of the most economically advantageous tender.
Public services contracts
In the case of public services contracts, given that in most cases it is relatively difficult for Contracting
Authorities to determine the scope of the services in a way that will prevent candidate economic
operators from interfering with the planning and output of the contract, it would seem that the criterion
of the most economically advantageous tender is a good practice in general.
There are of course cases of public services contracts where the criterion of the lowest price starts to
become an attractive option. Indicative examples of such cases would be public contracts for
cleaning services for buildings, publishing services, transport services etc., where the Contracting
Authorities are often in a position and prefer to specify themselves the contract scope at a level of
detail, based on which candidates are only required to acknowledge the specifications in their
tenders and differentiate them only in terms of the price offered.
Weighting the technical value of the contract against the price offered
Weighting the technical value of the contract against the price offered is done by selecting
the weighting factor which is appropriate in each case, as presented in detail in the above
example of using the two-stage evaluation process.
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In other words, it is necessary to select the appropriate factor n which will determin the final
ranking of tenders in decreasing order of their aggregate mark L:
L = * n + C * (1-n)
where:
= the tenders technical evaluation mark
C = the relative cost of the financial offer
n = the weighting factor used to weight the technical value of the contract against the price
offered.
High weighting factors n (over 80%) effectively lead to the contract being awarded
to the economic operator whose tender has the highest technical value, while low
weighting factors n (less than 60%) effectively being to transform the criterion of the most
economically advantageous tender into a lowest price criterion.
Put simply, the weighting factor n determines how much extra money the Contracting
Authority is prepared to pay in order to award the contract to an economic operator
whose tender is of a higher technical value. The definition of the appropriate weighting factor
n (according to the requirements of every contract) is one of the key parameters that
contribute to the achievement of best value for money (BVFM).
The example below presents the way in which the weighting factor functions.
Table 2-25: Functioning of the weighting factor
Assuming that the weighting factor chosen to weight the technical value of the contract against the
price offered is n=80%, then the fraction n/(100-n) = 80/20 = 4 shows that we have decided to accept
a higher price by up to 4% in order to achieve an increase of the technical value by 1%, or a higher
price by up to 8% for an increase of the technical value by 2%, a.s.o.
In other words, if a financial offer is higher by 4.1% (4.1 > 4) than another one while its technical value
(technical evaluation mark) is lower by 1%, then the tender with the cheaper price and lower technical
value will be preferred.
In contrast, if a financial offer is higher by 3.9% (3.9 < 4) than another one while its technical value
(technical evaluation mark) is lower than 1%, then the tender with the higher price and higher technical
value will be preferred.
Similarly, if the weighting factor is n=60%, then the fraction expressing the weighting of the value of
the technical solution against the price offered is n/(100-n) = 60/40 = 1.5, i.e. it is significantly reduced.
Thus, the additional percent rate on the offered price which the Contracting Authority is willing to
accept in order to award the contract to economic operators whose tenders are of a higher technical
value is also significantly reduced.
In order to be able to compare the results of the final ranking of tenders using the weighting factors of
80 and 60, we present the above examples also in the case where the weighting factor chosen is 60.
if a financial offer is higher by 1.6% (1.6 > 1.5) than another one while its technical value (technical
evaluation mark) is lower by 1%, then the tender with the cheaper price and lower technical value will
be preferred.
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In contrast, if a financial offer is higher by 1.4% (1.4 < 1.5) than another one while its technical value
(technical evaluation mark) is lower than 1%, then the tender with the higher price and higher technical
value will be preferred.
To assist Contracting Authorities in defining the weighting factor to be used for
weighting the technical value of the contract against the price offered, the Table below
lists the key factors which as a rule lead to the selection of higher weighting factors.
Table 2-26: Factors leading to the selection of higher weighting factors
Contracts with specialised scope, for which significant experience is not available in the
market and therefore the Contracting Authority is willing to accept a higher price in order to
ensure their successful implementation.
Contracts the result of which is crucial and extremely important for the Contracting Authority.
This importance may be the result of:
o Significant benefits from the implementation of the contract.
o Significant adverse consequences from the unsuccessful or delayed implementation of
the contract.
o Large number of direct or indirect beneficiaries.
o The nature of the scope of the contract, which may concern e.g. interventions in socially
sensitive areas.
o Need for compliance with obligations and commitments undertaken at the national level.

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2.7.7 What about the Evaluation Panel?
Ideally evaluation panels should be selected at the pre tendering stage and all members
given a copy of the procurement timetable. The timetable will show when their input will be
required. (Tenders can be substantial documents and the Panel needs adequate time to
prepare prior to the evaluation meeting). If the timetable changes, then revisions should be
sent to the Panel so they can update their diaries.
An Evaluation Panel should comprise a minimum of three members to ensure a fair and
objective decision is reached. At a minimum it should comprise the procurement manager.
Where a Project Team is in place, the panel could be chosen from the Team. It is
recommended that the Evaluation Panel includes at least:
Representation from the major purchaser;
Someone with specialist knowledge and experience of the services/supplies/works
required;
Someone with the necessary knowledge to carry out the financial evaluation of the
pricing aspects in complex projects;
Depending on the size and complexity of the contract, additional team members may
also be appropriate, e.g. a Legal representative. There are special provisions
regarding the composition and the duties of the Evaluation Committees for the
various types of the Contracting Authorities (Ministries, Municipalities, Organizations
governed by the public law, Electricity Authority of Cyprus, Port Authority and Water
Supply Authorities). In this perspective refer to the Regulations 201/2007, 489/2004,
490/2004, 487/2004 and 491/2004.
All Panel members should be provided with a copy of the Evaluation Model to be used and a
scoring sheet. Panel members should be inducted on how to use both, to ensure there is a
consistency of approach.
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2.7.8 Summary of the decisions to be taken at the level of formulation
of the evaluation strategy
In summarising the discussion in Section 2.7 and especially in paragraphs 2.7.4,
2.7.5, 2.7.6 and 2.7.7, the decisions that must be taken by the Contracting
Authorities at the level of formulation of the evaluation strategy are the following:
Table 2-27: Decisions to be taken at the evaluation strategy formulation level
EVALUATION STRATEGY ISSUES DECISION TO BE TAKEN
1. Definition of technical
specifications
1.1 Method used to describe the technical
specifications
2.1 Establishment of qualitative selection criteria
2.1.1 Selection of personal situation criteria
2.1.2 Selection of the criterion regarding the suitability to
pursue professional activity
2.1.3 Selection of economic and financial standing criteria
2.1.4 Selection of technical and professional ability criteria
2. Planning of the qualitative
selection stage
2.2 Decision on whether or not to use the option to
limit the number of suitable candidates in a
restricted procedure
3.1 Selection of award criterion
3. Planning of the contract award
stage
3.2 Weighting of technical value against the price
offered
4. Evaluation Team staffing
4.1 Definition of required qualifications
responsibilities of Evaluation Team members

In Annex 2-1: Evaluation Strategy Formulation Template, an easy-to-use tool is
provided, in order to assist Contracting Authorities in mapping out and documenting all
the decisions to be taken at the level of the formulation of the strategy regarding the
evaluation of tenders.
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2.8 CONTRACT CONSIDERATIONS
This section deals with ensuring that all the mechanisms are in place before a contract is
awarded to ensure the delivery of a cost effective and reliable project, at the agreed price
and standard within the terms and conditions of contract. Contract management is a distinct
phase of the procurement cycle, and it begins long before the contract has been awarded.
The following list provides some of the key questions that contracting authorities need to
consider at this stage.
What is the contract trying to do?
What will be the contract monitoring process?
What type of contract should be issued?
How long should the contract run for?
What type of payment mechanisms should be put in place?
How can variations to the contract be negotiated?
What types of commercial arrangements are available?
It is important that contracting authorities put effort into this at this pre tendering stage since
the consequences of a poorly prepared contract can far exceed the contract value.

2.8.1 What is the Contract trying to do?
The contract is an agreement between the contracting authority and a supplier providing
goods, works and/or services. It is important that whatever contract is developed it
demonstrates:
the contracting authorities intent to contract;
a clear offer from the contracting authority and a clear acceptance of the offer by
the supplier;
the ability of both contracting authority and supplier to legally contract;
a price that the contracting authority agrees to pay the supplier;
a clear agreement between contracting parties about the terms and conditions of
the contract.

It is important that contracting authorities incorporate a number of key generic
considerations within the contract. Contracting authorities can use the following
checklist to ensure that the key elements are included in any contract which is awarded
within the designated period of the offers validity.
Table 2-28 : Key generic considerations for inclusion in a contract
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Key Considerations Y/N
Have you included the nature of the goods, civil works and/or services being
procured?

Have you defined the quantity being provided?
Have you outlined the contract or unit price?
Have you determined the duration of the contract?
Have you identified the conditions to be fulfilled by supplier and contracting
authority?

Have you outlined the terms of delivery and payment?
Have you defined the currency of payment?
Have you included the name and address of the Supplier?
Have you identified the rights and obligations of the contracting authority and of the
Supplier?

Have you considered the protocol for staff substitution?
Have you included all appropriate aspects of the law relevant to the contract?
Have you included provisions for the settlement of disputes?
Have you included the ownership of intellectual property where appropriate?
Normally the Procurement Manager is responsible for issuing the contract.
Contracting authorities need to ensure that staff have the necessary skills and
expertise to manage contracts and either considers training and development or buying-in
contract management expertise.
It is important that those staff that will be monitoring the implementation of the
contract should be involved in the development of the contract.

2.8.2 What type of contract should be issued?
Contract types are likely to vary according to:
the degree and timing of the costs of performance; and
The amount and nature of achieving specified standards or objectives.
There are a few commonly used contracts that may be issued by contracting
authorities. The following table may be used by contracting authorities when
deciding which contract to put in place.

Table 2-29 : Key considerations when deciding on which contract to use
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Type of
Contract
When to Use Some Examples
Lump Sum
Contracts or
Fixed Price
Used mainly in projects in which the content
and the duration of the required outputs are
clearly defined. Payments are linked to
outputs (deliverables), such as reports,
drawings, and bills of quantities, bidding
documents, and software programs. Lump
sum contracts are easy to administer
because payments are due on clearly
specified outputs.
They are widely used for services
and works based contracts e.g.
simple planning and feasibility
studies, environmental studies,
detailed design of standard or
common structures, preparation of
data processing systems,
construction contracts.
Time Based
Contracts or
Fee Based
Contracts
This type of contract is appropriate when it is
difficult to define the scope and the length of
services, either because the services are
related to activities by others for which the
completion period may vary, or because the
input of the consultants required to attain the
objectives of the assignment is difficult to
assess. Payments are based on agreed
hourly, daily, weekly, or monthly rates for
staff (who are normally named in the
contract) and on reimbursable items using
actual expenses and/or agreed unit prices.
This type of contract is widely used
for complex studies, supervision of
construction, advisory services,
and most training assignments.
Price Based
Contracts
These contracts are used when contracting
authorities need to have "on call" specialised
services to provide advice on a particular
activity, the extent and timing of which
cannot be defined in advance. The unit rates
to be paid for the experts are agreed and
payments are made on the basis of the time
actually used.
These are commonly used to retain
"advisers" for implementation of
complex projects, expert
adjudicators for dispute resolution
panels, ongoing procurement
advice, technical troubleshooting
etc.
Percentage
Contracts
Percentage contracts directly relate the fees
paid to the Consultant on the estimated or
actual project construction cost. The
contracts are negotiated on the basis of
market norms for the services and/or
estimated staff-month costs for the services,
or competitively bid.
These contracts are commonly
used for architectural services.
Performance
Based
Contracts
The contracts focus on the purpose of the
work as opposed to how the work is done.
The focus is on the overall cost for a
particular service or works while complying
with quality standards. The contract sets out
the price and the required outcomes,
outputs and targets.
Examples of service contracts
include landscape maintenance for
public parks, recruitment services,
ICT solutions. Examples of works
contracts include the fast track
construction of a public golf course.
Service Level
Agreements
These are used when contracting authorities
wish to outsource a service to a supplier and
are usually drawn up for a one year
(maximum) period. It is important with these
contracts in particular to spell out the terms
of service that and supplier will provide and
how the agreement will be monitored.
Particularly common for ICT
services such as ongoing website
management or operational
support on ICT projects.
Design and In this contract one supplier performs both These are used for the construction
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Build Contracts design and construction under a single
contract. The contracting authority has less
risk in the construction of a large contract.
of capital infrastructure and are
normally awarded to construction
companies.
Turnkey
Contracts
In this contract one supplier is the single
point of contact for all facets of the project,
from design through to commissioning and
the start up of the facility/installation of the
product.
One example is the design,
development and implementation
of a major software solution. These
contracts can often awarded
through public private partnerships
and can include large construction
works such as the design, build
and operation of health care
facilities.
The implementation MUST NOT commence until the contract has been awarded and
it has been signed by all counterparties.

2.8.3 What will be the contract monitoring process?
Contract management is the active monitoring and control of all aspects of the relationship
between the supplier and the contracting authority and the monitoring and control procedures
for any contract should be considered at the specification stage. The activities can be
divided into three areas: service delivery management, relationship management and
contract administration. It is the responsibility of the contract manager to ensure that all three
areas are being implemented according to the requirements of the contracting authority.
Although the activities that need to be considered under each category will vary
depending on the nature of the contract and the goods, services, and works being
provided, there are standard practices which can be included. The following outlines a
number of monitoring requirements that contracting authorities should consider at the pre-
tendering stage.
Table 2-30 : Key contract monitoring requirements at the pre-tendering stage
Activity Example Options
Monitoring the suppliers performance against the
specific targets set out in the specification.
Through the use of a phased approach
and therefore reviewing progress at the
end of regular phases against the
original targets
The way in which completed work will be inspected
and accepted.
Through site visits for construction
projects or presentation of interim
reports for consultancy projects.
Acceptance can be through a signed
inspection report or agreement to pay
an interim payment.
How complaints will be received and recorded from
customers particularly where the service may be
delivered to the public on behalf of the contracting
authority.
Provide a specific point of contact within
the contract management team to deal
with customer complaints.
How customer satisfaction with the service will be
recorded
For example, the use of questionnaire
evaluation forms at the end of staff
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training courses.
Obtaining information from the supplier on their
opinion of their progress.
Through the use of regular progress
reports or site meetings
Agreeing any revisions in timescale, quantity/quality of
outputs from the supplier
Through monthly progress review
meetings.

The management of any contract requires significant resources depending on the
size and complexity of the contract. Large contracts usually require 2% of the
contract value for the management aspect. This proportion increases for smaller contracts.
In order to keep control of a contract it is important to identify key progress review points
during the implementation of the contract that allow for structured and regular communication
between the contracting authority and the supplier. The number and extent of these review
points will be determined by the complexity and length of the contract. However the key
control issues that contracting authorities need to consider and plan for at the pre-tendering
stage include:
Any unsatisfactory performance;
Any mis-understanding of the requirement by the supplier;
The possibility of inadequate channels of communication between contracting
authority and supplier;
Any changes to the contract brought about by altered requirements;
The possibility of unrealistic initial timescales (often the most common control
issue in service contracts);
Any changing circumstances for the supplier (e.g. excessive growth, or reduced
earnings leading to lay offs);
The possibility of supplier insolvency.
Often discussion with the supplier will be sufficient to keep control of the contract.
However it is important to undertake ongoing and regular monitoring of a contract to
ensure that the control issues are identified earlier and therefore allowing more time to
implement corrective action and minimise the impact of any problems.
2.8.4 How long should a contract run for?
The length of a contract will depend on the nature of the project being procured. It is
important to decide on the optimum duration of a contract. Contracting authorities should try
to strike a balance between the competitive value of a short term contract and the ability to
go back out to tender against the stability, continuity and possible better annual value for
money achieved through longer term contracts.
The longer the period of a contract the greater the monitoring requirements.
Consider early on about the issues of re-competition at the end of the contract period,
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particularly if a long term contract is likely to provide better value for money. Re-competition
occurs when:
the end date of the contract has been reached
the decision has been made to terminate a contract
The supplier resigns or becomes insolvent.
The re-tendering process should begin well in advance of the end of the current contract
such that in cases where there needs to be a smooth transition, and the existing supplier
does not retain the contract, there is time to induct a new supplier. Importantly, re-tendering
is subject to the same procurement processes as outlined in sections 2.1 to 2.7.
2.8.5 What type of payment mechanism should be put in place?
T Ti im mi in ng g o of f p pa ay ym me en nt t - Contracting authorities should be committed to paying their suppliers
on time. Normal payment periods should be specified in the contract, i.e. within 45 days of
the receipt of the goods or service or a correct invoice, whichever is the later.
An Earlier payment period can be used in return for some benefit, such as, free delivery of
supplies, discounts associated with prompt payments etc. However it is important that
payment is not made unduly early i.e. less than 45 days for no benefit.
A Ap pp pr ro oa ac ch h t to o P Pa ay ym me en nt t Contracting authorities should aim within a contract to hold back
as much of the payment as possible towards the end of the contract to increase the
negotiation power. A staged approach to payment is to be encouraged. This enables the
contracting authority to negotiate the implementation of the various stages of the contract
rather than on completion when it may be too late to alter any changes. Contracting
authorities should aim to ensure that the stages of payment represent a tangible, or at least
measurable achievement (such as part delivery) while still ensuring that as much of the
payment as possible is linked to the satisfactory completion of the project. For example:
small staged payments could be made at a certain point in a large construction process,
such as when foundations are laid, 80% of the building is erected and on final completion; or
based on interim progress reports or draft documents for a consultancy assignment.
Contracting authorities need to withhold a respectable percentage of the overall contract
costs to final satisfactory completion.
2.8.6 Negotiating on variations to the Contract
Contract variations are negotiated between the contracting authority and the supplier and
may or may not arise as a result of the contract monitoring process. Variations relating to a
decrease in the scope or price of a contract can occur for a number of different reasons,
such as:
the quantity or quality of goods or services or works being required by the
contracting authority may change;
the timescales for delivery of goods or services or works may be altered due to, for
example, market demand;
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changes to the nature of the service being provided, (especially in longer term
contracts) may occur such as when there is a change in market demand or new
technologies or new and unforeseen legislation;
Unforeseen events (e.g. industrial action of key personnel of the supplier).
Regardless of how they are identified, there should be clear change control procedure set
out in the contract on how variations will be dealt with.
Once the terms of the variation has been agreed you should instruct and prepare a
deed of variation. Once approved, contract variations should be monitored and
controlled in the same way as the original contract. It is important to note that the competent
bodies (Project Manager, Departmental or Central Committee for handling Variations and
Claims) have the power and duty to decide on any proposed modifications or variations to a
contract and/or claims raised by a contractor and/or the interested service (Regulation
115/2004).
When there is a need to increase the scope and price of a contract, please refer to the
National Law 12 (article 33 b, d) In these cases the Contracting Authority needs to
award the supplementary or new similar services, works and goods to the existing contractor
using the negotiated procedure.
Any variation should not modify substantialy the contract scope, distorting in this way
the initial competition and infringing the principle of non discrimination. In addition,
you should never agree a variation verbally or by letter as this may invalidate the whole
agreement or weaken your right of enforcement. For delaing with any varition the defined
procedure should be followed.
2.8.7 What types of commercial arrangements are available?
There are a number of commercial arrangements that can be put in place to meet the
requirements of a contracting authority, such as:
S Si in ng gl le e s su up pp pl li ie er r In some cases it may be preferable to proceed with one primary contractor
who then subdivides and subcontracts the project. For example:
A building or engineering scheme where the contract is procured on a design and
build basis, for example the construction of a new leisure complex or the supply
and installation of a network security ICT system.
In a supply contract, it is fully acceptable to include service components that are
directly related to the supplies (commissioning, and periodic maintenance at least
for the warranty period). For example the recently procured supply and
maintenance of 400 notebook computers by the Department of Information and
Technology Services.
The provision of a large management consultancy contract that requires a wide
variety of expertise. For example, management consultants may strengthen their
team by the use of associate experts.
The combination of works, supplies and services in one contract can be
reasonable, for example, with the construction of a new hospital this would include
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the foundation works for a prefabricated building, delivery of the building itself and
maintenance of certain components of the building, (such as heating system,
elevators and other service-prone components).
M Mu ul lt ti ip pl le e S Su up pp pl li ie er rs s In other cases it is more appropriate to proceed with several smaller
contractors, for example, the hire/purchase of specialised vehicles for technical services or
the management of a conference that requires an events management supplier, catering,
venue hire etc. Multiple suppliers may also be used in large infrastructural projects such as
the various parts of the construction of a motorway.
The number of suppliers engaged often depends on the type and complexity of the
project. Contracting authorities should use the following checklist when making their
decisions to procure to one large supplier or several smaller suppliers.
Checklist 2-6: Considerations when deciding on the number of suppliers to use
Option Consideration Yes/No
One Large
Supplier
Does the contracting authority wish to have one point of
contact?
Does the historical reputation of the supplier provide confidence
in their efficiency and effectiveness?
Does the contracting authority require the contractor to be
responsible for the coordination of operations?
Is the contractor required to show innovation in the use of sub
suppliers?
Does the contracting authority wish to benefit from economies
of scale?

Several smaller
contractors
Is it likely that the procurement process can be extended over a
longer period of time to allow for a number of suppliers to meet
the need?
Does the contracting authority have flexibility with timeframes in
the delivery of the contract?
Does the contracting authority need a greater level of co-
operation in the delivery of the contract than might be achieved
with one larger supplier? (involvement of SMEs)
Does the contracting authority need to spread the risk of failure
across a number of suppliers?


Risks associated with one large supplier that need to be considered, include:
High risk of failure in case of non-performance or insolvency;
Large specification to be prepared with longer lead time;
Possible onerous dispute settlement with very experienced personnel of the
supplier;
Additional costs associated with project management fee of main supplier;
May lead to monopoly situations.

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Risks associated with several smaller suppliers that need to be considered,
include:
A number of smaller suppliers create a substantially more complicated
coordination for the contracting authority whereby it is more difficult to control
outputs;
The risk of incompatibility among suppliers is greater than with just one supplier.
Where it is necessary to deal with a sole supplier, service provider or contractor,
arrangements which provide best value for money should be negotiated. Care should
be taken by contracting authorities when they face a supplier, service provider or contractor
with an exclusive right to provide a particular supply or service in a designated territory.
Open-ended arrangements
3
with these exclusive distributors should be avoided where
possible.
P Pu ub bl li ic c P Pr ri iv va at te e P Pa ar rt tn ne er rs sh hi ip ps s ( (P PP PP P) ) - is the umbrella name given to a range of initiatives
which involve the private sector in the operation of public services. The Private Finance
Initiative (PFI) is the most frequently used initiative. The key difference between PFI and
conventional ways of providing public services is that the contracting authority does not own
the asset during the process of development. The authority makes an annual payment to the
private company who provides the building and associated services. For example a
contracting authority may wish to appoint a PFI to set up and run a new nursing home. In
some cases the contracting authority may wish to purchase the asset depending on the
terms and conditions of the contract. These companies are usually in a consortium including
a building firm, a bank and a facilities management company. Whilst PFI contracts can be
structured in different ways, there are usually four key elements: Design, Finance, Build and
Operate. It is important that contracting authorities contract with the consortia and not with
any one member of the group.

2.9 PARTICULARITIES IN THE PROCUREMENT OF SUPPLIES, SERVICES &
WORKS
The procurement of public supplies, services and works has been codified in a consolidated
Legal framework, which, however, refers to specific differences on how to deal with each
one. This section therefore deals with a number of key questions:
What are the specific features of the procurement of supplies?
What are the specific features of the procurement of services?
What are the specific features of the procurement of works?

3
The term open-ended arrangement refers to an arrangement of indefinite time (i.e. not defined
ending date) or undefined (open) scope, which leads, in the long-term, to a permanent cooperation
relationship, infringing in this way the basic principles of public procurement.
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How does the Legislation apply to mixed contracts?

2.9.1 What are the specific features of the procurement of supplies?
Supplies are tangible products that incorporate stocks, stores, equipment, materials and any
other object that can be regarded as a physical presence. Supply contracts can be awarded
through the full range of procurement procedures and through framework agreements. A
framework agreement is reasonable, if there is a continuous demand for specific goods over
the long term.
What is specific about supplies (as compared to services and works) is the ability to precisely
describe the technical specification. For example, should a contracting authority need to
replace a dated computer system then it is possible to specify the requirements of the new
system in relation to required quantity, RAM capacity, design and capabilities, software and
hardware features etc.
When specifying a supply tender it is important to distinguish between mandatory
and optional specifications.
According to the EU Directives and consequently the National Law, it is important
that no reference is made to any make or model of any supplies when tendering
for a supply contract. The EU promotes the use of performance specifications.
Determining the value of public supply contracts
Where volumes and prices are known in advance then the value of the contract is the full
amount a contracting authority will pay during the life of the contract. For example 100,000
items a 2 each over a 12 month period gives a total contract value 200,000.
The simplest way for a contracting authority to calculate the value is to set a fixed
term of no more than twelve months, the value will be assessed as the value of the
contract during the contract period.

Table 2-31: How to calculate the value of a supply contract
For supply contracts that are awarded regularly or those that are being renewed within a
specified period, the value shall be calculated either as
the aggregate value of similar contracts concluded during the previous twelve-
month period, and, where possible, adjusted to take into account the requirements
of the contracting authority in quantities or values during the twelve-month period
following the original contract, or
The aggregate value of the public contracts that will be awarded during the twelve-
month period following the contract or, if the contract period is longer than twelve
months, during the whole period of the contract.
If a contract involves leasing, rental and hire-purchase for an indefinite period it may
not be a straight forward calculation. In this case the contracting authority needs to
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calculate what they expect to pay each month and multiply by 48 to arrive at a notional
contract value.
No contract for a given quantity of supplies may be split up with the intention of
avoiding application of the threshold value.
If the aggregated estimated value of a contract exceeds the threshold, each contract must be
advertised in the OJEU, even if the estimated value of the individual contract is below the EU
Thresholds. Several procurements of supplies of the same type that are to be made at the
same time need to be regarded by the contracting authority as one single procurement for
the calculation of the estimated value.

2.9.2 What are the specific features of the procurement of services?
Service contracts include advertising, property management, cleaning, management
consultancy, training, financial and IT related services. There are a number of features
specifically related to the procurement of services.
D De ef fi in ni in ng g t th he e O Ou ut tc co om me e - - Services tend to be less tangible than supplies and therefore more
difficult to define within a specification. Contracting authorities should aim to define outcomes
such as:
A tangible end product such as a report. For example the following outputs are
relevant when a contracting authority wants to assess local labour skills against
the requirement of inward investors. The contracting authority might procure a
management consultancy research report that provides them with
- A research report including a framework for action
- A Presentation of findings to present to the Minister
- An Executive Summary suitable for publication/press release
A tangible benefit such as the development of skills and expertise in staff through a
training and development programme.
Most service contracts are awarded on the basis of the Most Economically
Advantageous Tender and through a series of relevant and appropriate evaluation
criteria. It is important with service contracts that part of the selection criteria relates to
reliability of the supplier and the expertise and ability of the personnel involved.
C Co om mp pl le ex xi it ty y o of f s se er rv vi ic ce es s - - Service delivery normally means the delivery of a service package
consisting of several single services. This could include for instance, a main service (e.g.
training course contents and its delivery by trainers), supportive services (provision of
equipment, textbooks and other materials) and side services (catering for participants). All
these aspects need to be considered within the tender specification.
Due to the complexity of some service requirements, contracting authorities may
break the contract into separate contracts, for example, a complex IT contract
might be broken down into staff training, network maintenance, trouble shooting, and hotline
and so on.
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In estimating the value of a public contract, the value of material and equipment needed to
carry out the services to be supplied by the contracting entity and which are
required for the provision of the services shall be taken into account.
In awarding public contracts for insurance services the value of the contract shall be
calculated on the basis of the premium payable. For banking and other financial services,
the corresponding calculation shall be made on the basis of the total amount payable in fees,
commission, interest and other types of remuneration. For architects' services and similar
services, the calculation shall be made on the basis of fees and commission payable.
Where a contract is one of a series of similar contracts the value of each must be
aggregated to determine the estimated value of the overall project. As with supply
contracts, if the aggregated estimated value of a contract exceeds the threshold, each
contract must be advertised in the OJEU, even if the estimated value of the individual
contract is below the EU Thresholds.
E En ns su ur ri in ng g c co on ns si is st te en nc cy y i in n q qu ua al li it ty y When appointing service providers contracting
authorities should explore opportunities to request relevant European Standards for
quality assurance in the specification document.
The delivery of a service is often a unique process and difficult to repeat in another
circumstance (for example, the group dynamics in a staff training and development
programme). However it is possible to obtain consistency in outputs, for example:
Number of participants completing the programme
Number of participants receiving accreditation for the programme
Level of accreditation of the programme
Length of the programme (i.e. 2 days? 6 months? etc)
As the quality of service delivery is usually dictated by the skills and expertise of the
personnel involved it is important that contracting authorities set out minimum
requirements for the skills and expertise of the personnel in the specification.
The Law excludes a number of services and service contracts from its application.
Please refer to Law 12(I)/2006.

2.9.3 What are the specific features of the procurement of works?
Works are defined as capital development projects such as building and engineering
contracts.
EU Thresholds
Contracting authorities are required to estimate the value of the whole works project even
though it may be made up of a number of separate contracts for different activities. For
example, if the construction of a new building requires site clearance, construction and fitting
out, the threshold must be applied to all three phases (total value) even though the activities
are different and may involve different contractors. Related services, for example
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architectural services may be purchased under separate contracts, in which case their value
need not be counted against the whole works project value.
As before, no procurement may be split up with the intention of avoiding application
of the threshold value.
C Co om mp pl le ex x P Pr ro oj je ec ct ts s works contracts are generally complex in nature and occur over a
longer timeframe. Large construction projects such as the building of a new motorway
require expert project management and the input of a number of key stakeholders.
It is important that the contracting authority allocates sufficient personnel to the
project and secures their input at the very early stages of the procurement process
and certainly in the development of the specification. Details acquired during the
procurement process can be invaluable during the management of the implementation of the
project and therefore contracting authorities need to ensure that detailed monitoring
information is properly maintained from the outset.
D De et ta ai il le ed d t te ec ch hn ni ic ca al l s sp pe ec ci if fi ic ca at ti io on ns s In many works contracts, there is a requirement for a
team of experts on the procurement team with a wide knowledge and specific expertise. The
contracting authority may have this expertise in-house or may have to recruit one or more
external advisors.
With large scale construction works it is advisable that contracting authorities play
close attention to warranties and liabilities with contractors since it is common to
have additional works and complications that arise in the course of the construction that wee
not necessarily planned for from the outset.
As a rule, in traditional construction projects, a percentage of the contract (normally
20%) is withheld from the supplier until a final warranty is received which may be
some time after the completion of the construction itself. However in design, build and
operating contracts, payment will be directly linked to performance.
E Ev va al lu ua at ti io on n o of f T Te en nd de er rs s The evaluation of tenders for works contracts often show
significant variations in quality and price between different bidders. The evaluation
committees of contracting authorities may wish to use formal clarification meetings with
bidders to establish these differences and therefore make direct comparisons more
manageable. All clarification should be copied to all bidders in the competition.

C Co on nc ce es ss si io on n C Co on nt tr ra ac ct ts s. . These are public works contracts where the contracting authority
includes in the tender documents the right for the supplier to exploit the works carried out
under the contract. For example a contracting authority may grant a private company the
right to exploit a motorway by charging tolls to offset the cost of construction.
Details relating to public works concession contracts are stated in the law N12, Chapter
VII.

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S Su us st ta ai in na ab bl le e D De ev ve el lo op pm me en nt t. . Works contracts, in particular, need to emphasise the overall
approach of best value for money rather than the lowest price. It is important that contracting
authorities give due consideration to four key objectives for sustainable development:
Effective protection of the environment
Prudent use of natural resources
Social progress which recognises the needs of everyone
Maintenance of high and stable levels of economic growth.
Works contracts can have a particularly negative impact on sustainable development,
however the following hierarchy may be useful when considering ways to decrease negative
environmental impacts.

The Law stipulates specific procedures in the organisation of design contests in the area
of services. Please refer to Law N12, Chapter VIII.

--------------------------- Eliminate e.g. hazardous material content
--------------------------- Reduce e.g. emissions produced
---------------------------Re-use e.g. packaging
-------------------------- Recycle e.g. paper, glass, metals
-------------------------- Dispose e.g. minimise quantities & cost
For example contracting authorities have the opportunity on a works contract to recycle old
road materials on site, rather then bringing new material from elsewhere which also enables
costs to be reduced, benefiting the environment and saving time.

2.9.4 How does the Legislation apply to mixed contracts?
Usually it will be clear to a contracting authority how to categorise a contract. For example,
the construction of a new building is clearly works while the provision of a cleaning service
for a hospital is clearly service. However there are projects that contain a mixture of
elements such as supplies and services. A good example might be the requirement of a
contracting authority to acquire specific IT software together with staff training to use the
software.

In these cases the following guidelines should be applied.
Table 2-32: Guidelines for categorizing mixed contracts
Where it involves supplies and services the classification of the contract should be
determined by which element is of a higher value
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Where it covers works/supplies or works/services the classification of the
contract,should be determined by the predominant purpose
Where a contract provides for the supply of equipment and an operator it should
be regarded as a services contract
Contracts for software are classified as supplies unless they involve development
to the contracting authoritys specification in which case they are classified as
services.
2.10 EXEMPTIONS TO THE RULES SPECIAL CASES
The EU directives set out specific exclusions to the requirements of the Directives. A series
of exemptions are set out within the EU Procurement Directives and the Law N12 for the
award of public works, supply and service contracts in the Republic, which permit contracting
authorities to ignore the Directives for specific categories of projects. Contracting authorities
must still comply with financial controls and ensure were possible the procurement process is
open and transparent.

If a contracting authority is unclear if a particular requirement is exempt from the
Directives it is important to check the full Common Procurement Vocabulary (CPV)
descriptor and coding. This will clarify if the Directives are applicable. An up to date list of
CPV codes can be found on at official EU Web site. www.SIMAP.eu.
This section addresses a number of important questions including:
How are the exemptions defined?
What strategies could be applied in the exemptions?
How can competition be maintained in the exemptions?
The acquisition of Physical Infrastructure: Renting/Leasing or Purchasing?

2.10.1 How are the Exemptions defined?
The following table can be used by contracting authorities to define the exemptions.
Table 2-33: Defining the Exemptions to the EU rules
Exemption Background
Telecommunications These contracts are intended primarily to allow,
contracting authorities to provide or exploit public
telecommunications networks or to provide one or
more telecommunications services to the public
The acquisition or rental of land,
buildings or immovable property
These contracts relate to the acquisition or rental of
immovable property or rights to such property.
They have particular characteristics which make
the application of public procurement rules
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inappropriate. For example, the requirement to
purchase a particular piece of land near an
advanced road infrastructure for the construction of
a new hospital.
The acquisition, development,
production or co-production of
programme material for
broadcasting
Contracts in the field of broadcasting should allow
aspects of cultural or social significance to be taken
into account which render application of
procurement rules inappropriate. For example, the
requirement for educational videos relating to the
history of Cyprus. However, this exclusion should
not apply to the supply of technical equipment
necessary for the production, co-production.
Research and Development The encouragement of research and technological
development is a means of strengthening the
scientific and technological basis of Community
industry, and the opening-up of public service
contracts contributes to this end. This Directive
should not cover the co financing of research and
development programmes or contracts other than
those where the benefits accrue exclusively to the
contracting authority for its use in the conduct of its
own affairs.
Arbitration and conciliation services Arbitration and conciliation services are usually
provided by bodies or individuals designated or
selected in a manner which cannot be governed by
procurement rules. For example, the requirement
for an arbitrator that does not have a direct conflict
of interest in the project.
Financial services in connection
with the sale, purchase or transfer
of securities or other financial
instruments
Financial services relating to securities or other
financial instruments may require a particular
approach that sets them outside the normal
procurement routes.
Employment contracts Employment and occupation are key elements in
guaranteeing equal opportunities for all and
contribute to integration in society. In this context,
sheltered workshops and sheltered employment
programmes contribute efficiently towards the
integration or reintegration of people with
disabilities in the labour market. Such
workshops/employment programmes might not be
able to obtain contracts under normal conditions of
competition.


2.10.2 What strategies could be applied in the exemptions?
The following are examples of some of the strategies that could be applied.
Land Purchase
Contracting authorities may require to purchase land for a series of reasons such as a new
road system, water treatment works, office accommodation and so on. The normal practice
is to take professional advice on benchmark costs and enter into negotiations with the land
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owner. Contracting authorities normally retain or can access, current land values and sale
prices and therefore should be able to assess if the deal will provide VFM. It is always
prudent if possible to have more than one solution and to consult with internal, local or
national experts.

Buildings
Contracting authorities occassionally require additional buidings either for short or long terms
needs. There are a number of possible options to aquiring a building depending on the
nature and duration of the requirements, including: rent, lease, licence or outright purchase.
It is important to carryout detailed market research to assertain availability and levels of
competition within the desired locations. Each option should be costed, including operation
and relocation costs over the estimated whole life of the requirement to ensure the best value
for money is obtained. (options to rent lease or buy are dealt with in more detail in section
2.10.4)

Research & Development
Research and development (R&D) carried for the benefit of a contracting authority can be
exempt from the Directives. It is important that contracting authority clearly defines the
nature of the R&D from the outset and what measured benefits they hope to achieve along
with the timescales in which to achieve them. If there are a number of Public & Private
sector organisations that could carry out the R&D it is advisable to subject the project to
competition to ensure you are achieving VFM.

2.10.3 How can competition be maintained in the Exemptions?
These areas are exempt from the rules where competitive conditions apply. However the
onus is still on contracting authorities to secure best value for money. In such cases direct
exposure to competition is more likely to be decided on criteria such as :
The characteristics of the goods or services concerned
The existence of alternative goods or services
The price
The actual or potential presence of more than one supplier of the goods or
services concerned.
When deciding on making an exemption, contracting authorities will need to make and note
an explanation as to why this is the case. The exemptions are very narrowly interpreted by
the EU and the ECJ.
2.10.4 Acquisition of Physical Infrastructure: Rent/Lease or Buy?
The responsibility of a contracting authority is to ensure bvfm and in the case of making
physical infrastructure available for the general public then it is important to consider, not
only the purchasing (acquiring) of property but also options of renting/leasing. From the
beneficiaries/ users perspective the point of view of legal ownership and the financing of the
asset is normally of secondary interest. For example, when a local community require a
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building for child care facilities it is normally of little interest whether the premises of the local
kindergarten or hospital are made available by renting, leasing or purchasing the building.
Table 2-34: Renting/leasing vs. purchasing
Option Advantages for the Contracting
Authority
Disadvantages for the Contracting
Authority
Purchasing
/Owning
- Unlimited right to use, change, reuse,
dispose of the asset.
- In general lower total cost even under
outside financing
- The contracting authority owns the
asset with possible appreciation in
value
- The contracting authority can
depreciate the equipment (where
appropriate or for contracting
authorities that pay taxes).
- The equipment appears as an asset
on the balance sheet
- It requires higher up-front
investment and the contracting
authority runs the risk of depleting
reserves
-Large expenditure is not available
for other projects
- Advances in technology can make
the equipment purchased obsolete
even before it's paid for.
- Payments are typically higher.

Leasing - Costs are certain and are known in
advance;
- No need to tie up capital in fixed
assets;
- Allowances, depreciation and other
calculations are not needed, since
leasing is concerned only with rentals;
- Leasing provides a medium-term
source of capital which may not be
available elsewhere;
- pay as you earn
- Deferred decision on purchasing
(financing) to a later date is possible
- Contracting authority can be involved
in decisions on the features of the
asset
- Fixed period (limited risk against
obsolescence of the asset)
- No disposal cost
- Limited right to use the asset
- Responsibility for maintenance and
running costs
- Potential higher total cost
- It is generally not possible to
dispose of the asset before the end
of the lease.
- The asset is not owned.
- Funds must be found to pay the
lease throughout its duration.

Renting - Good for short-term projects,
especially when equipment is not likely
to become part of your regular
operation

- No responsibility for maintenance
only running cost
- User is usually NOT involved in
decisions on the features of the asset
- Higher total cost
Renting provides the highest flexibility for the user and is appropriate for short-term
arrangements. The influence on the features of the asset is close to zero (take it or
leave it) Typical assets to be rented out are flats, offices, and accommodation. If you dont
know how long you will use the asset, go for renting.
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Leasing provides the user with less flexibility than renting but with more freedom than
ownership. The user is committed for a well-defined period. After the agreed leasing
period all responsibilities fall back to the provider and the user is free to look for new
arrangements to use better or more or less assets according to the need either by leasing
again or by renting or by purchasing. Typical assets for leasing are cars, machines, such as
photocopiers, medical and IT equipment (mainly equipment with short innovation cycles) but
also buildings.
Purchasing and Owning an asset is usually cheaper than leasing or renting. But
owning assets binds the owner much more than renting and leasing. Purchasing is
the appropriate option for long-term use.
The following Checklist should be used when deciding to lease, buy or rent.
Checklist 2-7: Questions to be asked when deciding to lease, buy or rent
What is the current level of competition with the relevant markets for each option?
What is the available budget?
Does the budget allow for large capital investment or continuous payments over the
requirement of the goods, services or infrastructures?
What will the Goods, Services or Infrastructures are used for?
How long will you require the Goods, Services or Infrastructures?
Is the asset likely to appreciate or depreciate in value? (i.e. estimated residual values)
Is the acquisition in an area of high technology and is it likely to become obsolete in a
short space of time?
What are the tax and accountancy implications of lease vs. buy?

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