Invitation to tender for provision of consultancy services to undertake a mid-term review of the English JEREMIE funds.

June 2013

North East Finance (Holdco) Ltd
Ground Floor

1 St James’ Gate
Newcastle upon Tyne
NE1 4AD

  1. Summary

This Invitation to Tender (“ITT”) is being issued by North East Finance (Holdco) Limited, a company with registered number 07000577 and registered office at 1 St James Gate, Newcastle upon Tyne, NE1 4AD (“NEF”).

The purpose of this ITT is to appoint consultants to conduct an independent review of the following three venture capital projects which were established in the North of England in 2010:

  1. The North West Fund: a £155m holding fundmanaged by North West Business Finance Limited (“NWBF”) which is being invested via six sub-funds;
  2. Finance Yorkshire: a £90m holding fund managed by Finance Yorkshire Limited (“FY”) which is being invested via three sub-funds; and
  3. North East Finance: a £125m holding fund managed by NEF which is being invested via seven sub-funds.

All three holding funds were established under the JEREMIE programme. JEREMIE stands for Joint European Resources for Micro to Medium Enterprises and is a joint initiative between the European Commission and the European Investment Bank Group.

JEREMIE funds are intended to increase access to finance for micro, small and medium sized enterprises (“SMEs”), using financial engineering instruments (“FEIs”) such as venture capital and loan funds (“VCLFs”). These provide investment finance on commercial terms to businesses which have difficulty raising it from banks or other private investors due to lack of collateral and/or the early-stage/higher-risk nature of their business.

The three holding funds (NWBF, FY and NEF) secured investment capital and grants for operating costs from the European Regional Development Fund (“ERDF”) (managed in England by the UK government Department for Communities and Local Government (“DCLG”)), the European Investment Bank and the former Regional Development Agencies’ single programme budget, which is now managed on behalf of the Department for Business, Innovation and Skills by Capital for Enterprise Limited (“CfEL”).

Each holding fund appointed independent fund managers to manage each of their sub-funds. The holding funds retain sole responsibility for servicing and repaying the loans which the European Investment Bank (“EIB”) has made to each holding fund, and for ensuring that their portfolio of funds achieve the financial returns and non-financial outputs (including job creation) which have been committed to ERDF and CfEL. Further details on each holding fund, the sub-fund managers and the financial commitments from each funder are set out in Appendix 1.

The funds began investing in 2010 and will continue to make investments until 2015. NWBF, FY and NEF are obliged as a condition of their ERDF funding to commission an independent review of the operation of their funds during their investment phase. For efficiency, and to maximise the value of the review, it has been agreed by the holding funds and DCLG that one firm of consultants should conduct all three reviews – which should not only assess the individual performance of each holding fund but should also identify any overarching policy lessons which can be drawn from the performance of each holding fund and the sub-funds. These policy lessons will contribute to national level thinking regarding both current VCLF programmes and future programmes which may be established over the 2014-2020 ERDF funding period.

The review will therefore comprise:

  1. three separate, stand-alone reports on the progress and performance of each holding fund and its portfolio of sub-funds; and
  1. an overall summary report which:
  2. sets out the main conclusions of the three holding fund reviews;
  3. evaluates the relative benefits of the JEREMIE funds and their economic impacts to date; and
  4. proposes recommendations to strengthen the operation and management of the three holding funds and to guide the future approach of FEIs and JEREMIEs in England.

The detailed specification of the work is set out in Appendix 1 to this ITT.

NEF will act as project-manager to coordinate both the procurement of the consultants and the process of facilitating the production of the report. The consultancy contract will be let jointly by NEF, NWBF and FY and the successful bidder will be engaged jointly by all three holding funds. The report is to be an independent report commissioned by NEF, NWBF and FY for them and for DCLG / ERDF and CfEL. The specification for the review (set out at Appendix 1) has been agreed by the ERDF Programme Teams for the three Operational Programme areas which fund the holding funds.

The configuration of the 2014-2020 ERDF programme is likely to be determined around September/October of 2013. So that the findings of this review can help to inform decisions on FEI and VCLF activity under the new ERDF programme, a first draft of the report must be produced by the end of August 2013.

2. Format of Tender Response

Your tender response should include the following information:

Question no. / Question
1 / Executive Summary (maximum 2 pages)
1a / Provide a brief outline of how you propose to fulfil the services required
as detailed in Appendix 1 (the “Services”).
1b / Outline your company’s unique selling point(s) in relation to providing
the Services.
2 / Methodology (maximum 5 pages).
2a / Detail your proposed methodology to deliver the Services
2b / Provide details of the information you anticipate you will require from
NWBF, FY and NEF and/or other organisations in order to complete
this project.
2c / Indicate whether your tender is a joint submission with another
company and, if so, provide details of the other company/companies.
3 / Project team (maximum 3 pages, excluding CVs and organisation chart)
3a / Identify the account manager for this contract, and provide details of
any other designated persons.
3b / Provide details of the staff who will undertake the work on this contract
and summarise their relevant experience.
3c / Include staff CVs and an organisation chart.
4 / Relevant experience (maximum 3 pages)
Give examples of similar work your company has undertaken and how successful you were in meeting the required outputs. In particular, please demonstrate your familiarity with venture capital, the European Regional Development Fund and corporate governance.
5 / Ability to deliver within the timescales (maximum 2 pages)
Explain how you will ensure this project is completed within the timescales set out in this ITT, including a summary project plan.
6 / Price (maximum 1 page)
6a / Provide a total price for the completion of the project.
6b / Provide details of the price breakdown by staff member, number of days and daily rate
6c / Identify all anticipated costs (including VAT) and include provision for all anticipated expenses (including travel costs), dealing with queries and clarifications on the draft report and giving presentations on the findings of the report.

In relation to price, bidders are requested to take into account the relatively short timeframe over which the services are to be supplied and the fact that the ITT is not being conducted under an OJEU process and as such the contract price payable pursuant to this ITT cannot in any circumstances exceed £173,934. The budget available for the Services is significantly below that level.

Your response to this Invitation to Tender must also include the following sections:

Questionnaire / Please complete Appendix 2 of this tender and submit it with your response.
Certificate of Tender / Please complete Appendix 3 of this tender and submit it with your response.
Anti-collusion Certificate / Please complete Appendix 4 of this tender and submit it with your response.

3. Tender Evaluation and Submission

All responses should be structured as requested above and all questions in Appendix 2 should be answered fully. All responses will be evaluated against the following criteria. FI indicates that responses are for Information Only and will not be evaluated.

Question / Criteria / Weighting %
Section 1
1-7 / Company details / FI
Section 2
Legal status, regulation and financial standing
1 / Legal Status / FI
2 / Confirmation that your company will hold all authorisations, permissions, licences and consents required in order to perform the services tendered for / Pass/fail
3 / Audited accounts / Pass/fail
4 / Changes in ownership / FI
5 / VAT registration number / FI
6 / Details of any conflicts of interest / Pass/fail
7 / Details of any pending litigation / Pass/fail
8 / Details of any litigation in progress/completed / Pass/fail
9 / Details of any: petitions for winding up; winding up orders from the Court; appointment of receivers or administrators; convictions of criminal offences relating to: business and professional activities; professional misconduct; social security obligations, taxes. Details should be provided both in respect of the supplier’s company (or group where the supplier is part of a group) and its directors, in respect of whom any current or previous disqualification from acting as a director or any professional sanctions imposed must also be disclosed. / Pass/fail
Section 3
1 / Executive Summary
1a / Outline of you propose to fulfil the services required / 7
1b / Outline your companies unique selling points in relation
to providing the services. / 3
2 / Methodology
2a / Proposed Methodology / 15
2b / Information required from the JEREMIE funds / 5
2c / Details of whether the tender is a joint bid or otherwise / FI
3 / Project Team
3a / Details of account manager and other designated persons / 2
3b / Details of staff that will work on this contract and details of
their experience. / 13
3c / CVs and organisation chart / 5
4 / Relevant experience / 20
5 / Ability to deliver within the timescales / 10
6 / Price
6a / Total price for the project / 12
6b / Price breakdown by staff member, number of days and rate / 5
6c / Identification of all anticipated costs / 3
TOTAL / 100

The contract will be awarded to the response which is considered to represent the most economically advantageous proposal based on the above criteria.

In relation to the Pass/Fail criteria:

2: if you do not hold a licence or have any authorisations required to deliver the services, your bid will fail.

3: bidders must have positive net current assess (current assets divided by current liabilities) as disclosed in the audited accounts. The balance sheet contained in the audited accountsmust show that assets exceed liabilities. Your bid will fail if either of these tests is not satisfied.

6: a conflict of interest will only result in a fail if it is considered to represent a material conflict which is likely to prevent the bidder from providing an impartial and independent service and which cannot reasonably be considered capable of resolution by conflict-management processes on the part of the bidder.

7. & 8: only litigation which is considered to be material and likely to affect a bidder’s ability to complete the work would result in a fail

9: any current insolvency proceedings affecting the bidder or its group or any outstanding material action against the bidder or its group by a creditor(s) will result in a fail. Any unspent convictions or current or previous disqualifications or professional sanctions against directors will also result in a fail.

The section 3 responses will be scored in accordance with the following principles:

Score / Scoring Principles
0 / Unacceptable/Unaddressed – the response is unacceptable or has not addressed the specific question(s) asked and is therefore considered unacceptable.
2 / Significant Reservations – does not fully meet the requirements and therefore leads to significant reservations.
5 / Minor Reservations – The response meets the requirements with some minor reservations.
8 / Fully Meets – The response fully meets the requirements.
10 / Exceeds – The response meets and usefully exceeds requirements.

In the event that two or more bidders are awarded scores which are identical or very close, those highest-scoring bidders may be invited to present to the evaluators, to provide clarification of their written tender submissions. This will not afford any bidder the opportunity to (and no bidder will be permitted to) add to, or amend, their tender responses. Any presentations will be used solely to give evaluators the opportunity to confirm their scores or to correct them should an evaluator consider that any clarifications provided merit minor adjustment to scores.

4. Tender Submission

Please submit three signed and dated identical hard copies of your written tender response document, which should provide the information set out in section 2, above.

All tenders must be submitted no later than 12 noon on 28 June 2013. Any tenders received after that time will be excluded from the evaluation and will not be considered. The envelope containing the tender must be marked with “ITT Ref 01/13” and must be submitted to:

Alastair Smith

North East Finance

Ground Floor

1 St James’ Gate

Newcastle upon Tyne

NE1 4AD

Please also email an electronic copy of the tender submission after the deadline for submission of the hard copies, to:

Please note that the electronic copy must be identical to the hard copy and is requested solely to help manage the evaluation process efficiently. Electronic copies must only be submitted after the deadline for submission of hard copies and cannot be accepted in substitution for the hard copies.

5. Clarification questions on the ITT / Basis of Tender Submission

All queries in connection with this ITT must be addressed to Alastair Smith at or (0191) 211 2301. Any additional information or clarifications supplied in response to questions will be posted (on an anonymous basis) on the websites of each of NWBF, FY (in the ‘Tender’ section) and NEF (in the ‘News & Events’ section) so thatall interestedparties have access to the same information. Clarification questions should be sent no later than the 26 June and we will endeavour to respond to any questions within three working days.

To ensure a fair and transparent tender process no approach of any kind in connection with this ITT should be made to any person other than Alastair Smith. Failure to comply may result in disqualification from the process.

None of NEF, NWBF nor FY shall reimburse any costs associated with the preparation and submission of a proposal for this piece of work. If you chose to submit a proposal, you must bear all such costs.

Quotations and proposals must remain valid and open for acceptance for a period of at least 60 days from the date on which they are submitted to NEF.

NEF, NWBF and FY each reserve the right:

  • to suspend or cancel the tendering process at any time;
  • not to accept the lowest-cost proposal; and
  • to decline all proposals if none are considered satisfactory.

6. Contract Terms

The successful bidder will be required to enter into a contract with NWBF, FY and NEF in accordance with the draft which is set out at Appendix 5 of this ITT.

7. Project Management

Alastair Smith at NEF will act as overall project and contract manager on behalf of NEF, NWFB and FY and will be the first point of contact for general enquiries and day to day liaison with the successful bidder.

NWFB and FY will also identify lead contacts who will provide information for each organisation and will, as required, facilitate contact between the consultant and the relevant contacts within DCLG / ERDF and the sub-fund managers and stakeholder relevant to each fund.

8. Indicative Timetable

It is envisaged that the timetable for this procurement process and the subsequent delivery of the services will be as follows:

Activity / Date
Submission of Tender / By Noon, Friday 28 June 2013
Bidder presentations to be held (if required) / Thursday, 4 July 2013
Successful tenderer appointed / Monday 8 July 2013
First (all parties) inception meeting held / w/c Monday 8 July 2013
Inception meeting with NWFB held / w/c 8 July, or asap thereafter
Inception meeting with NEF held / w/c 8 July, or asap thereafter
Inception meeting with FY held / w/c 8 July, or asap thereafter
Progress updates to be provided / Frequency to be agreed
First draft report provided / By Friday 30 August 2013
Present draft findings to boards of NWBF, FY & NEF / During September 2013
Availability to respond to queries on draft / During September 2013
Final draft report provided / Monday 30 September 2013
Availability for up to 3half days to present findings to ERDF / CfEL / To be advised

All dates are subject to change apart from the report submission deadlines.

Appendix 1

Specification for Mid Term Review of the Northern Regions Joint EuropeanResources for Micro to Medium Enterprises (JEREMIE) - Financial Engineering Initiatives (FEIs)

June 2013

Specification for Mid Term Review of the Northern Regions Joint European Resources for Micro to Medium Enterprises (JEREMIE) - Financial Engineering Initiatives (FEIs)

1. Background

The JEREMIE[1] initiative offers European Union (EU) Member States, through their national or regional Managing Authorities, the opportunity to use part of their EU Structural Funds to finance small and medium-sized enterprises (SMEs) by means of equity, loans or guarantees, through a revolving umbrella fund. The initiative was developed by the European Commission (EC) and the European Investment Fund (EIF), which is part of the European Investment Bank (EIB) Group.

The North West, Yorkshire & Humber and North East have established holding funds under the JEREMIE initiative. The Holding Fund approach is able to deliver a number of benefits compared to the more traditional routes for distributing Structural Funds, including: flexibility in resource allocation; the ability to generate interest on the held funds; the ability to recycle funds that can be re-invested after 2015; leveraging private and other funding to support ERDF priorities; and allowing access to expertise and resources of both the private sector and other EU financial institutions.

2. Overview of Northern JEREMIEs

The North West Fund (TNWF)

TNWF is a £155m evergreen investment fund established to provide debt and equity funding from £50,000 to £2 million to SMEs based in the North West of England.

TNWF is funded by a grant from European Regional Development Fund (£77.5m) under the 2007-13 programme and is matched equally by private sector loan (£77.5m) from European Investment Bank.TNWF launched in December 2010 and will run for an initial investment period up to the end of December 2015, and through to the end of the expected realisation period 2022.