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INDUCTION TRAINING SEIO. Implementation: Tendering, Procurement and Budget Support. Training Objectives .

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Induction training seio


Implementation: Tendering, Procurement and Budget Support

Training objectives
Training Objectives

Overall the training will provide basic information on EU contracting procedures so that these can be taken into account when preparing implementation plans, sequencing and monitoring of future IPA Actions.

Specifically, the training will explain:

  • the PRAG and its relationship to the EU Financial Regulation;

  • contract types and their uses;

  • required documents for each contract type and procurement procedure

  • contract value and its effect on procurement procedures

  • time taken to complete the various procurement procedures and how to incorporate this into the development of realistic implementation plans

  • requirements for budget support


Contracts are the normal legal basis for the disbursement of IPA finances (there are others e.g. Delegated Agreements, Sector Budget Support)

In EU pre-accession funds a distinction is made between procurement contracts and grant contracts.

  • In procurement, the clients requirements are specified in contract documents (e.g. Terms of Reference for consultants).

  • By contrast, in grant schemes the client explains the problems and potential grant contractors make proposals to address these problems. The client chooses the best proposal and awards the grant i.e. The grant awardees design the solutions and not the clients (as in procurement).

Induction training seio

Practical Guide to Contract Procedures for EU External Actions (PRAG)

Regulation No. 966 /2012 of the European Parliament and the Council on the Financial Rules applicable to the general budget of the Union

Commission Delegated Regulation No. 1268/2012 of 29 October 2012 on the Rules of Application of Regulation No 966/2012 of the European Parliament and Council on the financial rules applicable to the general budget of the Union

Types of contract and associated documents
Types of Contract and Associated Documents

IPA Action


Terms of Reference




Technical Specifications

Bills of Quantity


Guidelines for Applicants


Tendering procedures
Tendering Procedures

Service contracts international restricted tender procedures
Service Contracts: International Restricted Tender Procedures

Service tender dossier
Service Tender Dossier

A. Instructions to the tenderers

Letter of invitation to tender

Instructions to tenderers

B. Contract

Contract, Special Conditions

Terms of Reference

Organisation and Methodologies

Key Experts

General Budget breakdown

Conditions for service contracts

C. Other information

Shortlist notice

Administrative compliance grid

Evaluation grid

D. Tender submission form

Supply tender dossier
Supply Tender Dossier

A. Instructions to the tenderers

Letter of invitation to tender

Instructions to tenderers

b. Contract


Special conditions


General conditions for supply contracts

Technical specifications

Budget breakdown

Model for performance guarantee

Model for advance guarantee

C. Other information

Glossary of terms

Administrative compliance grid

Evaluation grid

D. Tender submission form

Works contracts
Works Contracts

Works contracts cover construction, there are many national ‘standard’ forms of contract. Despite this, the EC have standardised on the use of an international contract format developed by the Federation Internationale des Ingenieurs-Conseils(FIDIC). It should be noted that IFIs (WB, EBRD) have their own standard documents which must be used by recipients.

The most commonly used forms of contract available under FIDIC are:

Conditions of Contract for Works of Civil Engineering Construction

(The ‘Red Book’)

Conditions of Contract for Design –Build and Turnkey

(The ‘Orange Book’)

Conditions of Contract for Electrical and Mechanical Works

(The ‘Yellow Book’)

Short Form of Contract

(The ‘Short Form’).

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Works Tender Dossier

Most works contract dossiers contain the following documents:

The Tender (Contractor’s offer)

The General Conditions of Contract (FIDIC Part I)

The Conditions of Particular Application (FIDIC Part II Clauses)

The Technical Specifications

The Design Documents (Drawings)

The priced Bill of Quantities /Schedule of Rates

Any other document forming part of the contract e.g. letters of clarification

Bills of quantity boq
Bills of Quantity (BoQ)

An itemised list showing the number/ quantity of items required to complete the works, the units of measure, the rate per unit of quantity and the consequent total cost for that item.

The BoQ may contain a number of bills classified by structure, trade, or standard method of measurement. In turn each bill will be broken down into separate items covering all elements of the works. The total number of items can be many hundreds.

During construction the quantity of each item is re-measured and using the Contractors quoted unit rates, the value of the actual works completed by the Contractor is measured

Role of the engineer
Role of the ‘Engineer’

One of the main aims of Contractors, whilst making every effort to complete the works according to the contract, is to maximise profits wherever possible.

This means the Contractor will interpret contract provisions to maximise advantage e.g. providing the cheapest materials to meet the minimum requirements in the specifications or by requesting frequent time extensions.

Under FIDIC conditions an independent ‘Engineer’ must be appointed to supervise the works and to ensure that they are carried out according to the contract. The Engineer issues ‘Take Over’ and ‘Default Liability’ Certificates when the works are completed

Responsibilities of the employer
Responsibilities of the Employer

Ensure that the works are legally acceptable

Appoint the Engineer

Define the scope of the Engineer’s responsibilities

Ensure that the site is freely available

Provide for the Contractor's needs

Pay the Contractor

Consult with the Engineer on contractual obligations e.g. delays (time & cost to Contractor); rejection (cost to Employer); default of the Contractor (cost to Employer) before determining the amount due.

Spd implementation p lanning
SPD: Implementation Planning

  • P = programming (period when the IPA action programme is expected to be adopted

  • C = procurement and grant award procedure

  • I = implementation period

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Programme Intervention Logic




Collective rural projects

Reinforcement of rural producers

Specific Objectives

Improved productivity

Overall Objective

Land consolidation

Increased revenues

Modernisation and adaptation

Development of existing activities

Improved farming tools

Jobs created & safeguarded

Stopping rural exodus

Attraction of outside companies

New activities (tourism)

Industrial buildings for new companies

Better living conditions

Improved value of naturalareas

Better image of rural areas

Restoration of the environment / rural landscape

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Budget Support

What is budget support bs
What is Budget Support (BS)?

BS is a method of delivering financial assistance which normally has 4 steps:

(Sector) Policy Dialogue

Financial Transfers (in ‘tranches’) to National Treasury Account

Performance Assessment

Capacity Development

BS is delivered by means of ‘Sector Reform Contracts’.

Political and economic focus of ipa bs
Political and Economic Focus of IPA-BS

Compliance with the political criteria should be the primary focus of IPA2 BS. In particular, assistance should support preparations for acquis chapters 23 and 24 (The ‘Rule of Law’)

For the economic criteria, the main focus of IPA2 BS should be on supporting the establishment of a functioning market economy (Copenhagen Criteria: i.e. ‘The ability to withstand the pressures of the internal market’)

Assessment of eligibility
Assessment of Eligibility

Assessment takes place at 2 stages in the programme cycle.

During programme preparation: assessment of relevance (are key constraints /weaknesses addressed?) and credibility (realism, institutional capacity, track record, political commitment)

During programme implementation: assessment of progress made in policy implementation (benchmarked against reform commitments)

Risk management framework
Risk Management Framework

Risk management is an internal assessment of risk levels based on the analysis of replies to questionnaires in 5 categories, namely:




Public Financial Management

Corruption /Fraud

There are 4 risk levels:





Beneficiaries are expected to define their risk response by means of ‘Mitigation Measures’ (these are monitored)

Whether to provide bs
Whether to Provide BS?

The EC decision on providing BS is based on 3 assessments:

Assessment of political commitment to a reform agenda (in line with EU accession)

Assessment of eligibility

Assessment of risks and mitigation measures

Variable tranches performance reserves
Variable Tranches: Performance Reserves

‘A Performance Monitoring System and related disbursement criteria is at the heart of any budget support operation’ (EC)

BS disbursements are of 2 sorts:

Base (or fixed) tranches: these are linked to eligibility criteria

Variable tranches: these are intended to create an incentive for improved performance and are based on performance indicators.

The EC limit (cap) the use of variable tranches to avoid unpredictability /volatility of disbursements. Typically, Sector Reform Contracts cover commitments for 3 years with an upper limit of 40% variable tranches

Variable tranche performance indicators
Variable Tranche (Performance) Indicators

The following principles should be applied:

Targets and indicators should be Coherentwith sector problem analysis and programme objectives

Whilst combined indicators may be used, the emphasis should be on Results

Number of indicators should be limited to a maximum of 8 per Tranche (to avoid loss of policy focus)

Indicators, targets and assessment methodology should be defined during programme preparation