Session: “Best Practice for Procurement of Services”

1. Session: “Best Practice for Procurement of Services” Award of legal services – recommended qualification requirements and evaluation criteria, potential risks – case studies Lenka Krutakova EBRD-Consultant, WOLF THEISS Kiev, November 2012

2. Agenda Applicable law and principles Recommended qualification requirements Recommended evaluation criteria Potential risks Case study

3. Applicable law and principles Treaty on the Functioning of EU (TFEU) Directive 2004/18/EC and 2004/17/EC Legal services fall within the scope of Annex IIB of Directive Non-discrimination, equal treatment, transparency Best value for money All EU competitors must have access to the tender Case law

4. Regime of legal services Annex IIB of the Directive - it uniquely categorised and thus not subject to the full scope of the Directive Many public bodies are relying on this provision to excuse themselves completely fromrunning competitive tender processes when they procure expensive legal services. Annex IIB does not prevent contracting authorities from procuring legalservices bycompetitive tender. Not published in the OJEU There is a key requirement for the providers of legal services tounderstand national law and link with providers of legal advice on a national and locallevel. Cross-border advertising isnot necessarily result in increased competition in this sector as it is unlikelythat bidders in other member states would be able to meet this thresholds of qualificationand experience in order to bid. Negotiated procedure with publication as a standard tender procedure allowed New directives

5. Recommended qualification requirements Taking past performance into account References regarding the legal services provided in the specific country – under what circumstances? Insurance Team members

6. Recommended evaluation criteria Possibility of evaluation of the qualification requirements (?) The lowest price – always possible Hourly rate/cap for the exactly specified task Framework agreements (pools)

7. Legal fees Public contracting authoritycan and does pay somewhat below the standard rate because of the quantity/frequencyof legal services it purchases a natural business expectation that private purchasersof legal services will pay a little more than the public contracting authority the guarantee of payment from the contracting authority in the current economic market isinvaluable. Members of the legal professions, no matter how big or small, are currentlyexperiencing the same invoice collection difficulties faced by many other businesses. Vs. too many protections and shelters which protect individual professionals fromthe vagaries of a competitive market

8. Potential risks Astronger aggregation of demand/ joint procurement mightinvolve certain risks in terms of restricting competition and hampering access topublic contracts by SMEs No provider has been able to bid for and deliver the full servicewithoutsubcontracting and/or forming a consortium with other providers. If no sub contracting possible - in some areas no bids. Thiscommissioning strategy carried a risk that local monopolies would be created. Indeed, sub contracting canarguably reduce competition because providershave shown a preference for working together as opposed to competing. Jointprocurement would be better suited to areas where astand-alone service with clear and objective quality requirements are procured No benchmark in which tomeasure how value can be obtained from the market place Absence of competitive tendering increased the cost to the public

9. Case study (1) Case ÚOHS-S84/2010/VZ-5550/2010/510/Ifa - The National Park and Protective Landscape Area of Šumava v. Czech Office for the Protection of Competition Subject matter: Legal, consulting and analytical services Problem: Discriminatory qualification criteria which according to the Czech Office for the Protection of Competition “did not correspond to the type, scope and complexity of the subject of the procurement“ and favored one candidate Qualification criteria: - Candidate who previously worked for the contracting authority - Evidence of three references re providing legal services for the contracting authority which manages the forestry administration - Request for an attorney-expert on public procurements who is experienced with introduction of information systems for entity managing the state property - Organization of award procedure on conclusion of framework agreement Result: Fine CZK 80,000 (approx. EUR 3,100) for violation of the Public Procurement Act

10. Case study (2) Case ÚOHS-S8/2011/VZ-4378/2011/540/MKr – VŠB – Technical University of Ostrava v. Czech Office for the Protection of Competition Subject matter: Legal services Problem: Requiring a certificate ISO* higher than was reasonable Qualification criteria: - Quality Management System Certificate ISO 9001 - Certificate Information Security Management System ISO 27001 series Result: - Fine of CZK 30,000 (approx. EUR 1,200) - Cancelation of award proceeding The Office considered the request of the contracting authority to suppliers to submit the certificate of ISO of inadequate quality as disproportionate and discriminatory and stated that the contracting authority significantly narrowed range of potential candidates who are experienced in similar subject matter of performance and would be able to implement it properly. Therefore the contracting authority considerably influenced the selection of the best tender. *ISO certificates = set of minimum requirements which must meet the supplier of goods or services in order to be considered as a reliable and trustworthy supplier. However, ISO certificates have been removed from the Public Procurement Act as of April 1, 2012 as unnecessary.

11. How to get the best bid from the best law firm Be open and transparent – allow tenderers to understand what you are going to do and how you are going to do it Be objective and ensure equal treatment of tenderers – allow all tenderers a fair and equal chance of winning the contract Be consistent – do what you said you were going to do

12. Thank you for your attention!

13. Contact Mgr. PhDr. Lenka Krutakova Tel: + 420 234 765 111 Fax: +420 234 765 110 E-Mail: lenka.krutakova@wolftheiss.com WOLF THEISS advokati s.r.o.Pobrezni 394/12186 00 PragueCzech Republic