Demand aggregation, market research, feasibility studies: options, actions and risks. Session 8. Framework Agreements, the Portuguese approach
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- Yago Neves Igrejas
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1 Demand aggregation, market research, feasibility studies: options, actions and risks Framework Agreements, the Portuguese approach Session 8 Workshop, Good Practices in Modernising Public Procurement MENA-OECD Network on Public Procurement rement Kuwait Day 3, May 15, espap Entidade de Serviços Partilhados da Administração Pública, I.P. Direitos reservados.
2 Centralised Purchasing System Portuguese model Centralized Model - Framework Agreement (FA) for Contracts and Acquisitions espap Ministry Purchasing Units (MPU) Selecting suppliers and awarding the best proposals for each Framework Agreement (FA) Acquisitions of goods and services categories available in the framework agreements (Call Off Stage / mini-competition) Public Tender Supplier Selection Request for Proposals Awarded Suppliers Request for Negotiation Awarding Proposals Public Tender announced via OJEU notice. Tender documentation available online Supplier technical and financial selection criteria Technical and functional requisites, contract requirements and economic proposal evaluation Contract awarded to the most economically advantageous tenders OR to the lowest price tenders Invitation for tendering to all the awarded suppliers (FA contractors) E-auction or traditional negotiation Best proposal (the most economically advantageous proposal OR the lowest price), as defined on the FA Framework Agreement Centralization Purchase of goods and services categories under the FAs are mandatory for the central public administration Centralization of acquisitions of goods and services under the FAs espap can opt to centralize the acquisitions of goods and services covered by the FA (example: Vehicles and Vehicle Insurance) 2012 espap Entidade de Serviços Partilhados da Administração Pública, I.P. Direitos reservados. 2
3 Centralised Purchasing System Selection of Framework agreements Spending categories Valid as of FA Contractors Waves FA in waves Car and Motorcycle Insurance Cleaning Services and Products Electric Vehicles Energy (incl. Electricity) E-procurement Tools Fuel and LGP Hardware and IT equipment Landline Communications (voice and data) Feb 2011 Aug 2010 Sep 2011 Nov 2011 Jun 2009 Sep 2012 Aug 2011 Jun nd 2 nd 2 nd 2 nd 1 st 1 st 3 rd Criteria: - Public Expenditures -CommonUse - Quick wins - Strategic Sourcing Meals Mobile Communications Office Furniture Paper and Stationery Printing and Copying Security and Surveillance Services Software Licensing Travel and Accommodation Vehicles and Motorcycles Jul 2010 Oct 2012 Mar 2010 Apr 2011 Apr 2011 Apr 2010 Sep 2009 Sep 2011 June rd 1 st 3 rd 1 st 1 st 2 nd 1 st 3 rd 2 nd The renewal rate of framework agreements e in 2011/12 was 33%, stimulating competition and larger presence of SMEs 2012 espap Entidade de Serviços Partilhados da Administração Pública, I.P. Direitos reservados. 3
4 Centralised Purchasing System Identification of goods/services/works Identification of annual expense Conceptual model by espap Evaluation of the public administration needs Market s solutions review Public Administration Consultation Concept model and technical solutions review with all ministries i i Preparation of technological solutions to include in the FA Term of the framework agreement, FA criteria award,... Technical Validation by experts Review and validation of products and services specifications Public Consultation Economical operators, associations, public administration & citizens 2012 espap Entidade de Serviços Partilhados da Administração Pública, I.P. Direitos reservados. 4
5 The National Public Procurement Plan Assessing needs and planning demand Purchasing Entities identify needs and estimate budget UMC collects and validates information, incl. comparison with last year Aggregation of demand according to the types of goods and services needed Integration of information from different ministries, with comparisons Preparation of Draft version of the National Public Procurement Plan Ministry level espap Version sent for validation and approval Changes Reception and evaluation Negotiation Meeting of the CIC commission and preparation of the Final National PP Plan Formal approval of the Ministry of Finance Publication of the National PP Plan espap, UMC and CIC 2012 espap Entidade de Serviços Partilhados da Administração Pública, I.P. Direitos reservados. 5
6 Centralised Purchasing System Identification of needs and aggregation methodologies Aggregation: g a) Internal b) External, UMC, CPB or third party To aggregate it is necessary to: Understand available goods and services in the Catalogue Define rules: duration of contract, timeline, formularies, documentation, etc 2012 espap Entidade de Serviços Partilhados da Administração Pública, I.P. Direitos reservados. 6
7 Centralised Purchasing System Identification of needs and aggregation methodologies Best practices Do not include all goods and services rationalise» Advantages: Order management Stock management Invoice management Assess and plan needs (at least one year ahead, but it is possible to adapt to each category and/or FA) Define clearly the rules, but be flexible if necessary 2012 espap Entidade de Serviços Partilhados da Administração Pública, I.P. Direitos reservados. 7
8 Centralised Purchasing System Dividing contracts/subcontracting Through the Portuguese e-procurement solution, SMEs are able to better access public markets, either isolated or in association, in order to improve scale. In designing the tenders, several measures were taken according to the principles of the European SBA, like creation of lots, regionally and by size, adaptation of requisites to the economic dimension of the markets, multi-access criteria or allowing subcontracting. Currently SMES account for 70% of the System s 250 suppliers espap Entidade de Serviços Partilhados da Administração Pública, I.P. Direitos reservados. 8
9 Centralised Purchasing System Organizing mini-competition/call-off CALL OFF under espap FA Identification of Needs (Purchasers Entities) Aggregation of Needs (UMC/ESPAP) Conduct needs assessment of the entities Standardize the technical requirements Aggregate demand, validate approvals for the expenditures and spending Use of the espap ecatalogue Prepare tender/invitation documents Call offs documents Comply with the requirements and award criteria defined in the framework agreement Invitation to all FA economical operators Use of espap electronic platform Invitation to all FA economical operators Contractors obligation of responding to all calls 2012 espap Entidade de Serviços Partilhados da Administração Pública, I.P. Direitos reservados. 9
10 Centralised Purchasing System Organizing mini-competition/call-off (2) CALL OFF under espap FA Improving Attributes of Proposals E-auction or traditional negotiation Awarding Best proposal (MEAT or the lowest price, as defined on the FA) Contracting authorities must: Report and Monitoring Monitor the conditions of supply / delivery Produce and submit award reports to espap FA contractors must: Meet the conditions agreed in contracts Report billing reports to the Agency, UMC and entities, within the time specified in the FA 2012 espap Entidade de Serviços Partilhados da Administração Pública, I.P. Direitos reservados. 10
11 Centralised Purchasing System Pricing mechanisms and MEAT evaluation within the frameworks FAs developed by espap allow both situations: a) MEAT b) The lowest price Individual contracting authorities, within the FAs, will fit MEAT criteria / weights to their individual situation or chose the lowest price espap Entidade de Serviços Partilhados da Administração Pública, I.P. Direitos reservados. 11
12 Centralised Purchasing System Pricing mechanisms and MEAT evaluation within the frameworks FA Lots Region Subcontracting ti Contractors / SME Paper & Stationary Paper Stationary No Yes 30 / 26 Consumables Printing & Copying Scanning Fax Portable printers Printers (Low, medium, high performance) Combine lot No Yes 21 / 18 Cleaning Services & Products Services Products North, South, Alentejo, Lisbon, Algarve, Azores, Madeira and National Level. (NUTS II) Yes 15 / 10 Security &Surveillance Services Surveillance Alarm Receiving Centre & Monitoring services Combine lot North, South, Alentejo, Lisbon, Algarve, Azores, Madeira and National Level. (NUTS II) Yes 8 / 0 NUTS: Nomenclature of territorial units for statistics / NUTS II (Basic regions for the application of regional policies) 2012 espap Entidade de Serviços Partilhados da Administração Pública, I.P. Direitos reservados. 12
13 IT Framework Setting up the framework agreement model Conceptual model Identification of annual expense Identification of bad practices in public sector Evaluation of the public administration needs Analysis of potential savings attached to the amount of the estimated expense Market s solutions review and link to the public administration needs Public Administration Consultation Concept model and technical solutions review with all ministries Preparation of technological solutions to include in the FA Term of the framework agreement, e FA criteria award, a... Technical Validation by main IT entities Review and validation of products and services specifications Public Consultation Submission to public consultation to collect contributions from general public and citizens, businesses associations, stakeholders, espap Entidade de Serviços Partilhados da Administração Pública, I.P. Direitos reservados. 13
14 IT Framework Products and equipments Personal Computers Desktop Laptop Standard Desktop High performance Desktop Standard d Laptop High performance Laptop Small Laptop Netbook Servers Rack Servers Blade System Standard rack server High performance rack server Standard Blade System High performance Blade System Peripherals Desktop/Laptop/ Servers/Others Storage Display Others 2012 espap Entidade de Serviços Partilhados da Administração Pública, I.P. Direitos reservados. 14
15 IT Framework Public Tender - Restricted procedure 1st step QUALIFICATION Technical and financial selection criteria: Experience (at least 5 customers of each) EBITDA Number of workers Years in the market NP EN ISO 9001:2008 e NP EN ISO 14001:2004 2nd step Invitation for bid Selection criteria: Economically most advantageous offer based on: Price Energy efficiency i Manufacturer environmental certification In this procedure: from 36 candidates, 32 passed to the 2 nd step 2012 espap Entidade de Serviços Partilhados da Administração Pública, I.P. Direitos reservados. 15
16 IT Framework Proposals The tenderers must identify equipments, accessories, peripherals, OS and their technical features, and also quote their maximum price. Example: Basis equipment Additional products and options Desktop computer + Keyboard + mouse + Display TFT 17 + RAM memory + OS+ technical assistance.. Laptop computer + Mouse + RAM memory + keyboard + transport case+ security cable+ docking station + OS+ technical assistance espap Entidade de Serviços Partilhados da Administração Pública, I.P. Direitos reservados. 16
17 IT Framework Lots/Competitiveness Lots / Number of bids Lots Selected candidates Proposals to be awarded Competitiveness Lot 1 - Desktop computers; Lot 2 - Laptop computers; Lot 3 - Rack servers; Lot 4 - Blade servers; Lot 5 - Components, accessories and peripherals; Lot 6 - Aggregate purchase of desktop and portable computers; Lot 7 - Desktop computers and laptops renting; 6 10 Lot 8 Rack servers renting; 4 10 Lot 9 - Blade servers renting Potential lack of competition at FA level Competitiveness was assured in the first six lots but in the seventh, eights and ninths there was some lack of it due to the renting type of provide, a quite unusual in the public sector espap Entidade de Serviços Partilhados da Administração Pública, I.P. Direitos reservados. 17
18 IT Framework Awards criteria FA Award criteria (1 st phase) The award criteria for the framework agreement tender was the economically most advantageous offer based on: Price Energy efficiency Manufacturer environmental certification Additionally all the products and equipments must fulfill technical / environmental requirements as well as required SLAs Call offs Award Criteria (2 nd phase) In the call offs under the FA, the award criteria must be one of the following: The lowest price or: The economically most advantageous offer based on: Price and: Environmental/ Energy efficiency, and/or Time to delivery, and/or Technical and functional adequacy, and/or Warranty period 2012 espap Entidade de Serviços Partilhados da Administração Pública, I.P. Direitos reservados. 18
19 IT Framework FA upgrade Product upgrade during FA length (usually 2 years) Can occur: By espap initiative or By contractors request (typically due to a product discontinuation) However, the new proposals must: Maintain or decrease price offer Maintain brand/maker Maintain or improve technical specifications 2012 espap Entidade de Serviços Partilhados da Administração Pública, I.P. Direitos reservados. 19
20 IT Framework Main issues Main issues and difficulties Diversity of public administration key needs Solved by constitution of lots with several package solutions which fit in the majority of requests (laptop, desktop, netbook, rack server, blade server, standard, high performance,...) Market diversity and modularity Solved by division on lots by product category attached with various possible combinations of peripherals, accessories and additional options for upgrade to ensure and optimize their adaptability FA Product upgrade Solved by availability of update procedure during FA duration Performance assurance Solved due the use of a settled requirement benchmark rating (Sysmark 2007: scenario office productivity/ Mobilemark 2007: performance qualification / Mobilemark 2007: battery life/ SPEC CPU 2006 CINT 2006 Baseline) Due to legal risk, espap did not request or refer any model /brand of processor (or other with similar performance). Instead we defined a level according an official and accepted benchmark (Bapco and SPEC) 2012 espap Entidade de Serviços Partilhados da Administração Pública, I.P. Direitos reservados. 20
21 Framework Agreements for Vehicles and Motorcycles (AQ-VAM) and Electric Vehicles (AQ-VE) AQ VAM and AQ-VE Defines technical requirements: Displacement, capacity ranges, weight, number of wheels, doors, places, wheelbase, height, ht length, minimum equipment, permitted load and other specs. 103 lots grouped in 6 typologies of vehicles: 5 groups for acquisition: motorcycles, Heavy Goods Vehicles (HGV s), Heavy Passenger Vehicles, ambulances, passenger cars and light commercial vehicles 1 group for operational leasing of passenger cars and light commercial vehicles Effective for two years, automatically renewed for one year up to a maximum of 4 years Defines obligations of suppliers and service levels to comply with before the purchasing entities and espap Sets penalties applicable to suppliers for failure to comply with the obligations Sets deadlines for payment Foresees management reports, which are the key to a detailed analysis and to support future decision-making process Sets the maximum prices in place during the validity period, with the possibility to improve by negotiating during the tender Defines products and suppliers 2012 espap Entidade de Serviços Partilhados da Administração Pública, I.P. Direitos reservados. 21
22 Budget planning and cost control Changing variable into fixed costs: Include variable cost components in the contract price Consider maintenance costs if necessary Maintenance costs year 1 year 2 year 3 year 4 6 Incl. in the contract Variable costs in the execution 2012 espap Entidade de Serviços Partilhados da Administração Pública, I.P. Direitos reservados. 22
23 Call-off process under the framework agreements for vehicles and insurance Users send the request through SGPVE (purchasing entities) espap Board approves the Call- off espap validates the request Aggregation process of requests according to the types of vehicles needed Preparation of the Call-off Documents (Invitation and Specifications) State Fleet Management System (SGPVE) Paper and electronic Release of the Call-off Proposals Reception and evaluation Negotiation Preparation of the Preliminary Report Preparation of the Final Report Awarding A espap E-Procurement Electronic Platform 2012 espap Entidade de Serviços Partilhados da Administração Pública, I.P. Direitos reservados. 23
24 Call-off process under the framework agreements for vehicles and insurance A Qualification documents Bank garantee (if contract > 200K ) Signing of the contract Court of Auditors (if contract > 350K ) espap E-Procurement Electronic Platform Delivery of the new vehicles, legal destruction of the old ones Preparation of Awarding Reports 2012 espap Entidade de Serviços Partilhados da Administração Pública, I.P. Direitos reservados. 24
25 Framework agreement Bidding documents Tender program / Invitation to tender Definition of lots: 8 Definition of price: min. discount (cents per litre) over reference price (pex. Fuel) Awarding criteria for the FA best discount offered per lot (weighted %) Tender specifications / Terms of reference Definitions, duration of the FA Obligations of the parties Auditing Acquisitions under the framework agreement Awarding criteria Duration of contracts under the FA Conditions and payment terms SLA s, technical and functional requirements (minimum) Reporting and monitoring Fee to the managing entity Penalties 2012 espap Entidade de Serviços Partilhados da Administração Pública, I.P. Direitos reservados. 25
26 Juntos, partilhamos eficiência Thank you
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