General Ex-Ante Conditionalities. Anna-Lena ZADEMACH-SCHWIERZ DG REGIO, E1, Competence Centre Administrative Capacity Building Brussels, Summer 2014

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1 General Ex-Ante Conditionalities Anna-Lena ZADEMACH-SCHWIERZ DG REGIO, E1, Competence Centre Administrative Capacity Building Brussels, Summer 2014

2 Contents 1. Overview and purpose of general ex-ante conditionalities (ExACs) 2. Assessment and evidence of fulfilment 3. Action plans 4. Delivery of Actions Concrete focus on Public Procurement 2

3 Questions How to assess fulfilment? How to prepare an Action Plan? What resources are available for support? What recurrent issues do we see linked to assessment of ExACs? How to address "changes in Directives"? What happens if we don't fulfil Actions by deadlines? 3

4 General Ex-Ante Conditionalities (ExAC) B.1 Anti-discrimination B.2 Gender equality B.3 Disability B.4 Public procurement B.5 State aid B.6 Environmental legislation B.7 Statistical systems and result indicators We will focus on Public Procurement 4

5 Public Procurement (PP) Basics Key principles Transparency Equal treatment & nondiscrimination Proportionality in purchase of works, supplies and services by public entities or entities with a public service mission in special sectors (water, energy, transport and postal services) Legal enactment Directive 2004/18/EC (Classic Directive) Directive 2004/17/EC (Special sectors) Directive 2007/66/EC (Remedies Directive) MARKT Interpretative Communications & Explanatory Notes ECJ Case Law A complex area with New Directives 2014 transposition by April

6 Public Procurement using ESI Funds RISKS Compliance: Fraud/Corruption Lack of knowledge/ experience, inadequate regulatory arrangements => inefficient public spending Errors => Financial Corrections OPPORTUNITIES Use of public funds: Value-for-money Support to policy 6

7 DG REGIO audit work Public Procurement irregularities 40% of irregularities detected by DG REGIO since 2005 are due to non-compliance with Public Procurement rules European Court of Auditors: DAS 2011 found 44% of all quantifiable errors were in Public Procurement. From , 32% of contracts audited were affected by errors National audits: report more and more irregularities on Public Procurement 7

8 DG REGIO audit work Public Procurement irregularities Most common errors detected by audit: Inappropriate tendering procedures Artificial splitting of contracts Inadequate assessment of bids Irregular additional works (25% of irregularities on PP) In general, lack of proper preparation of the tendering and inadequate level of publicity 8

9 DG REGIO audit work Public Procurement irregularities More risky areas: services contracts, followed by supply contracts are more risky than works ones (evaluation, monitoring of actual expenditure) smaller beneficiaries are more at risk (municipal level): weaker administrative capacity/experience and local considerations for choosing the companies concessions and long term services contracts: financial challenges and direct negotiations addenda/additional works: can change the balance of the initial competition 9

10 General Ex-ante Conditionality: Public Procurement "The existence of arrangements for the effective application of EU public procurement law in the field of the ESI Funds" Criteria for fulfilment: 1.Arrangements for the effective application of EU PP rules through appropriate mechanisms 2.Arrangements which ensure transparent contract award procedures 3.Arrangements for training & dissemination of information for staff involved in the implementation of the funds 4.Arrangements to ensure administrative capacity for implementation and application of EU PP rules 10

11 Assessment grid (1) Criteria for fulfilment Arrangements for the effective application of Union public procurement rules through appropriate mechanisms: EU Directives on public procurement (2004/17, 2004/18, 2009/81/EC 92/13/EEC and 89/665/EEC) have been correctly transposed by the Member State; The legal, institutional and procedural arrangements in place ensure legal certainty and coherent and uniform interpretation of EU public procurement legislation; Legal, institutional and procedural arrangements in place allow to address in an effective way the most serious and recurrent types of failures in the application of public procurement rules (i.e. to prevent, quickly detect and effectively remedy such failures and, if relevant, to apply appropriate sanctions). Existence of an effective system of judicial protection for tenderers. The arrangements in place should not create unjustified and disproportionate obstacles or disproportionate burden either to the tenderers claiming harm or to the contracting authority conducting the procedure. Criteria fulfilled? Elements of YES/NO non-fulfilment 11

12 Assessment grid (2) Arrangements which ensure transparent contract award procedures: The legal, institutional and procedural arrangements in place ensure the effective respect of the TFEU principles (e.g. equal treatment, transparency, non-discrimination) throughout the entire public procurement process for all contracts having a cross-border interest; Appropriate legislation/guidance on the award of concessions and public contracts including for those out of the scope of the Directives and which have a cross-border interest has been prepared by the Member State and made available to the potential beneficiaries (i.a. contracting authorities and entities and economic operators where appropriate) and the staff concerned in the managing authorities and intermediate bodies. Availability of appropriate IT tools and systems which ensure access to information on contract award procedures. YES/NO Elements of nonfulfilment 12

13 Assessment grid (3) Arrangements for training and dissemination of information for staff involved in the implementation of ESI funds: Appropriate training for staff involved in the application of EU public procurement rules at all relevant levels has been provided or has been planned; There is an effective training strategy developed (training sessions, only training, etc), with quantitative indicators, where possible. A system of dissemination and exchange of information is in place for all staff applying EU public procurement rules (managing authorities, intermediate bodies, certifying authorities, audit authorities and beneficiaries) ensuring consistent implementation of public procurement rules (e.g. setting-up a network of all staff involved in public procurement to exchange, via websites, direct mail, etc.) YES/NO Elements of nonfulfilment 13

14 Assessment grid (4) Arrangements to ensure administrative capacity for implementation and application of Union public procurement rules: Existence of a central body (or a coordinated network of bodies) having the administrative capacity (sufficient number and qualified staff) to give substantive practical and legal advice on application of EU public procurement rules to all entities subject to these rules in the field of ESI Funds YES/NO Elements of non-fulfilment Appropriate technical assistance (e.g. guidance documents, external experts) is provided to all the bodies involved in the application of public procurement rules in the field of ESI funds (launching, monitoring and control of public procurement rules). 14

15 Self-assessment of general ExAC Overall ExAC assessment for MS in PA, but The self-assessment (and specific actions in case of nonfulfilment) to be presented in the Operational Programmes concerned The summary of the self-assessment to be presented in the PA for those ExAC where the responsibility for fulfilment lies at national level and as an overview of National fulfilment (logically if ExAC is not fulfilled for any OP then PA should indicate "not fulfilled") It is recommended to include a full assessment of fulfilment of general ExAC in the PA when several OPs are concerned 15

16 General ExAC assessment by Commission The assessment of fulfilment by the Commission shall be limited to the criteria ( ) and shall respect national and regional competences to decide on the specific and adequate policy measures including the content of strategies (Art. 19(3) CPR) In case of non-fulfilled criteria by the date of the submission of the PA linked directly to legislative requirements, the reference point is the legislation in force by the date of the submission of the PA (Guidance on ExAC, section 2.2) e.g. issue of e-procurement raised by DG MARKT Current REGIO assessment: 11 MS will require Action Plans for Public Procurement in some MS, capacity problem is at regional level 16

17 Evidence of non-fulfilment available to Commission Findings of relevant audit reports conducted in Member States by OP Audit Authority, National Audit Authorities, ESI Fund Auditors, ECA leading to letters, payment interruptions etc. Number of OLAF or National Fraud investigations related to PP Conclusions of relevant studies and evaluation reports on public procurement On-going infringement cases launched by the Commission against Member States linked to effective application of EU public procurement law Under the European Semester process, a Country Specific Recommendation related to public procurement, e.g. "Increase transparency of public procurement and improve the implementation of public tenders by providing appropriate guidance and supervision." 17

18 Frequency of Country Specific Recommendations (2014 latest) Currently 9 MS have CSRs related to PP 18

19 Key messages for drafting of APs 1. Clear link to the main assessment criteria 2. First step: diagnosis of problem! 3. Define realistic and verifiable milestones and indicators (by 2016) 4. Fulfillment assessed against existing legislation, however action plan to anticipate new elements obligatory in near future 5. Use of TA for OPs to pro-actively support the fulfilment of ExAC 19

20 Action Plans 1. Diagnosis of problem(s)/weakness(es) 2. Objective(s) to be achieved e.g. Reduce irregularities 3. Actions to achieve objective(s) e.g. Guidance, targeted training, system changes 4. Responsibility for Action e.g. National MA for OP TA 5. Resources needed for delivery e.g. Specialist consultants + peer-to-peer support 6. Deadline for completion (Dec 2016 latest) e.g. June Verifiable measure(s) of successful achievement e.g. Production of Guidance; Declining error rate 20

21 Example of an inadequate AP Actions: Identification of measures to address the major errors identified by the EC on public procurement Preparation of regional guidelines on public procurement under the thresholds Preparation of dissemination of information to beneficiaries and other stakeholders in ESIF Deadline: 31/12/2016 Bodies responsible: Central government/regional/ma 21

22 Examples of elements for AP PP 1. Effective application of EU PP rules through appropriate mechanisms strengthening institutional cooperation definition of Coordination mechanisms reinforce MCS, e.g. repartition of ex-ante and expost quality controls appeal procedures (reduce delays and frequency of appeals) 2. Transparent contract award procedures availablility of appropriate IT tools 22

23 Examples of elements for AP PP 3. Arrangements for training and dissemination adequate training obligations for all staff, including routes to professional qualifications in PP communication channels between MA and beneficiaries 4. Arrangements to ensure administrative capacity for implementation and application stability and professionalisation of bodies (e.g. PP Agency), reinforcing of staff - HR Strategy assistance to Contracting Authorities (Guidance + TA) MA prior assessment and accreditation of capacity of grant recipients 23

24 Example of e-procurement - General comment of DG MARKT in ISC concerning e- procurement relating to new PP directives goes beyond EAC fulfilment requirement (bad practice) - Agreement REGIO MARKT: take comment into consideration only for those countries that need AP - DG MARKT to assist in definition of mile stones and indicators relating to e-procurement for AP omandatory electronic notification of call for tenders and electronic access to tender documents from April

25 Action plans linked to non-fulfilment of ExAC Follow-up Monitoring of fulfilment of actions (meetings of Monitoring Committee, annual meetings, etc) Reporting on actions to fulfil ex-ante conditionalities by Member States Deadline to fulfil ex-ante conditionalities: 31 December 2016 Member States shall provide information on the fulfilment of exante conditionalities (at the latest) in 2017 (within their annual implementation report (OP) - Art. 50(4) or their progress report (PA) - Art. 52(2) of the CPR). 25

26 Action plans linked to non-fulfilment of ExAC Failure to complete actions by MS The Commission may suspend payments in case of failure to complete the actions set out in the OP (Article 142(1)e CPR) The Commission shall lift the suspension of payments as soon: - as the MS has demonstrated that it has completed the actions - in case of the OP amendment (ExAC not applicable any more) 26

27 Implications of New PP Directives Rules will change midway through programming period New rules = Uncertainty = RISK (audit) New rules = Strategic opportunity to improve systems & tools (e.g. e-procurement, GPP, PPI) Need for funding new e-procurement IT systems (Thematic Objective 2 or 11) Need for support in transposition and training in application! 27

28 Help! To deliver Action Plans External consultants paid from TA budgets JASPERS Peer-to-Peer support from other MS who have overcome similar challenges DG MARKT (already working on strategic Action Plans with several MS) ESI Fund Geographic Desks & Competence Centre IFIs, OECD etc. 28

29 Practical Guidance on "How to avoid common PP errors" Target Audience is Procurement Officer managing day-to-day procurement activities Guidance structured around the main stages of a public procurement process, highlighting issue to look out for and potential mistakes to avoid, with links through to a more detailed Toolkit of resources addressing specific topics in greater depth and giving concrete examples on what to do and what not to do during the procurement and contract management stages of the project cycle. under preparation by Commission Inter-service Working Group 29

30 Discussion - exchange of experience Which General ExAC issues are most relevant in your country? What is your experience with Action Plans? Do you face any particular challenges related to Public Procurement? 30

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