Pillar 4: Capacity of the Contracting Authorities, with Emphasis on Professionalization

Pillar 4: Capacity of the contracting authorities, with emphasis on professionalization and integrity issues

This Pillar contains a main text (Strategy), a table with the specific actions (Action plan) and annexes. The annexes are complementing documents. They must be read in the light of the Strategy and Action plan and cannot amend or contradict the actions as set out in the Strategy and Action plan. Those texts always prevail over the annexes.

1.1State of Play

In Romania, public procurement is currently conducted on a decentralised basis by thousands of contracting authorities (for the period 2007-2014, a yearly average of about 7.300 contracting authorities conducted online or offline public procurement using a procurement procedure or direct awarding below or aboveEU thresholds). There is also a central purchasing unit within the health sector, established byGovernment Decision. However, the performance of this central purchasing unit willnotbe used as a benchmark for establishing the way forward.

According to the legislation in force, each contracting authority should include in its organization chart a unit in charge ofconducting procurement procedures. Some procurement officers are in charge only ofconducting procurement procedures, while others perform also other permanent tasks. This is the case in mostlocal authorities. At central and district level, all the contracting authorities have a unit in charge ofconducting procurement procedures.

Generally, the personnel conducting procurement procedures has various educational backgrounds (engineers, economists, professors, etc), therefore knowledge in public procurement is acquired over the years, without consolidating and valorising this expertise.In the best case they may have followed certified short term training courses, varying between 4-8 days, designed in accordance with the occupational standard for the occupation ofa public procurement expert.

An analysis of various reports in the area of public procurement, of the activity of CNSC, of the Courts' Decisions, the content of published tender dossiers, outcomes of procurement procedures and content of secondary and tertiary legislation in public procurement in Romania generates serious concerns in the following areas:

i.There is a lack of technical capabilities and skills at the contracting authority level in identifying the needs,preparing thetendering documentation, evaluating the offers and implementing the projects.

Lack of capability and expertise at the contracting authorities[1]' level for need identification and preparation of the tender documentation (scope of Work, contract provisions and instructions to tenderers) directly leads for example to:

complaints generated by the content of the Tender Documents and subsequently by the evaluation process;
use of inappropriate references for the calculation of the estimated value;
questions and answers during the bidding period, which lead to deadline extensions or cancellation of the procedures;
difficulties during the evaluation or lack of an appropriate reference for an appropriate evaluation;
inability of bidders to prepare meaningfuloffers of good quality;
discouraging serious bidders fromparticipating in procedures;
delays in contract implementation;
poor quality of contract result;
aneed for contract amendmentsand for additional funds to satisfy the realneed of the contracting authority.

The lack of technical skills at the level ofthe contracting authorities is a frequent deficiency.There is noprocurement function described in the organization chart of the CAsor of the big central purchasers. They repeatedly haveto relaunch procedures, which delays investments and leads to a low efficiency of public spending and high risks in implementation.

ii.There is a lack of legal / procedural skills at the level of the contracting authorities due to uneven expertise of procurement officers andthe absence of adequatesupportinginstruments (standard contract documents, proper help –desk, guidance, etc)

There is no professionalization and no career path in the area of public procurement in Romania. In addition, there is no formal distinction between a procurement officer and a procurement professional, since there is no culture for a „procurement qualification”.Moreover, there is no connection between the performance of procurement staff and their remuneration level. The remuneration of the staff is not adequatein view ofthe complexity of the work, and is completely uncompetitive compared to the salaries of procurement staff in the private sector. Lack of positive motivation is acknowledged as a systemic problem.

This lack of professionalization is also detrimental to integrity in public procurement, which is a source of constant concern and a major challenge in Romania. Dedicated actions are planned in this regard under pillar 3.

iii.Currently there is no dissemination or reference of good practices in the area of procurement in Romania, even if there is a certain awareness of the responsibilities and the difficulties faced by the public procurement officials whenperforming their duties.

iv.For public procurements above the threshold of direct purchase, the use of e-procurement remains fairly limited (between 17 - 21%) and only 26% of the total value of online contracts were contracted for works. This is mainly due to the fact that energy and transport contracting authorities use only marginally online procurement. Consequently, although the online publication of notices and tender documentations is widely used and known by Romanian contracting authorities, in terms of full implementation of e-procurement (the other phases of e-procurement, up to online award) very few contracting authorities[2] are using it at national level, mainly due to technical considerations (still missing query and data filtering and export functionalities, lack of business intelligence, analysis features, etc.) but also due to the general administrative culture.

1.2. Way Forward

The correct and effective application of procurement procedures, compliant with the applicable legislation and maximising value for money for the tax payer requires adequate instrumentsto be applied, solidorganisational support, as well in-depth knowledge and specialised expertise of procurement officers.

Shifting the focus from compliance to quality-based results requires a mechanism capable to produce systematic and reliable information. This isessentialfor the performance of the procurement system, and is addressed by the actions proposed below.

Increasing the capacity of contracting authoritiesrequires extensive efforts, resources and time. A more efficient and effective approach could be to create clusters of expertise in public procurement and to strengthen the capacity of specific contracting authorities, by coveringprecise dimensions: people, process and infrastructure.The actions for improvement are structured around the following actions:

Developing supporting guidance and tools for contracting authorities;
Addressing some common and structural implementation shortcomings (utilities location, design and management of feasibility studies,…);
Professionalisingprocurement officers;
Mechanisms for mutualising the capacity of contracting authorities and aggregating demand

1.2

1.3

1.2.1. Actions: scope and expected impact

Increasing technical and procedural abilities at the level of contracting authorities by establishing guidelines and standard bidding documents

In order to secure a unitary professional approach in conducting procurement at the level of contracting authorities the web-based guideline is to be designed and administrated at the system level. Details on the role and content of the web-based guideline isoutlined in Annex 6 to Pillar 1.

The web-based-guideline will address in detail the issues linked tothe pre-award stage of the procurement, i.e.specifically market analysis, cost estimation,contracting strategy.

In addition to the guidelines, the responsibilities of the consultant in the pre-award stage shall be increased. It is envisaged that consultants in charge of designing the projects and preparing the tendering documentation will have to provide the contracting authorities with reliable estimation of the corresponding costs, anticipating the expected market reply as foreseen in pillar 3 of the Strategy. Developing standard sets of Tender Documents/Dossier is a pre-requisite forstrengthening capabilities at CAs level. Standard documents will be developed for each type of procedure, covering at leastthe following:

General and specific information in relation to the procurement procedure

This information would be collected and detailed in the tender documentation as general and specific conditions for conducting a specific procedure. Therefore, the general conditions would be common for procurement procedures of aspecific type (open, restricted, negotiated), while the specific conditions would be tailored for each procedure.

From the perspective of the contracting authority the part of the tender documentation addressing the procurement procedure shoulddemonstrate – in relation to the market – that all conditions are fulfilled to ensure that the procurement exercise is conducted fairly and transparently. It should also communicate the rules, requirements, criteria, norms and other information requiredfor conducting the procurement exercise.

From the perspective of the economic operator, this part of the tender documentation must provide all necessary information in order to: (i) decide whetherto participate or not in the procurement exercise, (ii) understand the formal and substantialrules, (iii) understand the proofsrequired to fulfil the minimum qualification requirements and selection criteria, (iv) allow the preparation of a bid / application which fulfils the requirements of the Contracting Authority.

The information to be included in the Tender Documentation,shall refer totheselection and qualification of bidders, preparation and submission of offers, opening and evaluation of offers, contract signature, rights of the contracting authority within the procedure, appeals/remedies.

Guidelines for the preparation of technical or performance specification

This information would be collected and integrated in the tender documentation and detailed as general and specific conditions for the preparation of technical or performance specifications.The informationwould be as customised, as much as possible, for the specific types of contracts: services and intellectual/professional services, works, supplies, with the aimtoprovide sufficient information to the bidders onthe scope of the contract: the needs of the Contracting Authority and what are the requirements to meet these needs.

From the perspective of the contracting authority, the role of this part of tender documentation is to provide aclear presentation of the requirements and expectations, and to avoid divergentinterpretations from thebidders.

From the perspective of the economic operators, the role of this part of tender documentation is to obtainclearaccess to the requirements (minimum specifications) and expectations (desired specifications), to allow for accurate determination of the possibility to implement the contract, as well as to present the information in a waywhich allows the bidder to calculate the coststo implement the contract.

The information to be included in the Tender Documentation, under the general and specific information in relation to the technical and performance specifications, for the supply contractsrefersrefers to: definitions, equivalence of standards and codes, manufacturing, electrical specifications, design criteria, supply of information technology equipment and software, general environmental and health & safety requirements, spare parts, packaging labelling, transport, installation, testing, training, operation and maintenance manuals, acceptance.

The information to be included in the Tender Documentation, under the general and specific information in relation to the technical and performance specifications for the services contracts refers to: background information about the beneficiary and the project,contract objectives & expected results, results to be achieved by the contractor, assumptions underlying the contractrisks, contract scopewith clear and detailed list of tasks to be undertaken in order to achieve the contract objectives, location and duration of implementation,specific requirements related to personnel and required expertize, contract management arrangements and management structure,facilities to be provided by the contracting authority and contractor, schedule of payments, reporting requirements, performance incentives.

The following is a list (indicative not limitative) of the information to be included in the Tender Documentation, under the general and specific information in relation to the technical and performance specifications, using web-based-guideline as a tool for disseminating the information, for the works contracts:

In case of technical specifications (works contracts): the scope of the specification (its objectives and content); definitions: explanation of any technical or specialised terms used, the purpose of the equipment or material that is the subject of the specification, reference to any related documents (such as standards or legislation) which apply, materials requirements, tolerances and permissible variability, desired appearance, texture and finish requirements of the finished product, drawings, samples or models of the required product (where available), conditions under which the item or material is to be installed, used, manufactured or stored, maintenance and reliability requirements, specification of packaging and protection, information to be provided by the supplier for users
In case of performance specifications (design and build contracts) – engineering included: the functionality, performance or capabilities to be achieved, key process inputs which will contribute to performance, the operating environment and conditions in which the performance is to be achieved (and extreme or unusual conditions in which it is not expected), how the product is required to interface with other elements of the process, required quality levels, required safety levels and controls, required environmental performance levels and controls, criteria and methods to be used to measure whether the desired function has been achieved;
In addition, all works conditions shall be detailed, such as : access to the site, traffic deviation, geotechnical conditions, normal weather conditions, etc… They are needed by bidders to draft their offers and they also set the standard of “foreseeable” conditions. Deviation from these detailed conditions might then justify contract modifications.

Whenever possible and relevant, more detailed technical documentation will be drafted, building on the experience acquired for EU funded water and waste projects.

The appropriate, personalized set of Tender Documentation will thenbe prepared first for buildings thermal rehabilitation, schools, road rehabilitation, hospitals. .

A holistic approach will be followed for the preparation of bidding documents, entailing the following:

Technical documentation for relevant frequent projects (or template detailing the above required information otherwise);
Corresponding selection and award criteria, whose justification and proportionality have to stem from the detailed description of the procured works;
Contractual provisions, ensuring balanced and proportionate allocation of responsibilities between contractors and contracting authorities (see iii below)

Currently different sets of standard documentationare under preparationfor services: preparation of infrastructure projects, supervision of infrastructure projects and contract management. These are a priority in order to address the problems upstream from the project preparation/implementation.

For supervising engineer’s contracts, the following in particular will be introduced:

Selection criteria will be aligned on those applicable for the underlying works contracts;
Contractual provisions will detail the required responsibilities of the engineers and enhance their accountability;
Recourse to outsourced independent laboratories will be required for key performance tests before accepting any works

General and specific contract conditions for works and services

Based on the previous experience in implementing EU funds, the legislation shall be modified so foresee that FIDIC conditions of contract will be mandatory for managing works contracts. This measure will align the approach in contract management for all financing sources and will secure a balanced allocation of risks between employer, contractor and the engineer.

The section addressing the general conditions of the contract will include clauses to be applied in all contracts. The text of the general conditions clauses shall not be modified by the contracting authorities.

The section addressing the specific conditions of the contact will include clauses specific to each contract scope and will supplement the general conditions. These conditions will be prepared by the contracting authorities.

Overcoming recurrent implementation shortcomings to smoothproject preparation and contract implementation

Recurrentshortcomings have been identified inthe implementation of works contracts, havinga negative impact onthe investment, leading to delays, disputes and price increases.

Some indicative but not exhaustive examples of frequent problems:

Management of utilities: information on utilities’ location is not systematically attached to tendering documents or if attached does not reflect the real situation.
Management of authorisations:contractors are often made responsible for obtaining authorisations that should be provided by contracting authorities, and available when the contract is awarded. The shift of responsibility dissuades serious bidders, leads to substantial delays in execution and triggers additional costs. As a result, the contracting authority is put in a position in which it depends on the contractor, although it has officially transferred the responsibility to him..
Recourse to insufficiently experienced supervising engineers: They cannoteffectively manage and monitor the implementation of the contract and provide the assistance to the contracting authority, for which they have been hired. This isparticularly critical for design and build contracts, when the contracting authority has to approvethe proposed design.
Execution following feasibility studies: According to the Law on public finance 500/2002, investments are approved by an inter-ministerial committee on the basis of a detailed list of indicators stemming from the feasibility study. These indicators defined through GD 28/2008 are later used in a rigid manner during the tendering and implementation stage, especially in case of design and build projects, with the design required to match in all respectsthe initial indicators, triggering a lack of flexibility in the implementation and difficulties in the relations with the contractors.

A set of measures is foreseen in at various levels (legislative framework, contractual conditions, standard documentation) in order to remedy the situation and lead to a change of approach.

Legislative obligations will be introduced in the relevant sectorial regulations obliging utilities’ owners / operators to issue updated and accessible mapping (with adequate details and ideally GIS based) of their networks. Given the substantial work required to get updated and accessible mapping, it is envisaged to:
postpone the entry into force of the obligation (for instance by 2 years from the issuance of the related law), leaving them reasonable time to comply with this requirement;
Mobilise public funding (under applicable State aid scheme) – including EU funding – to support the required mapping;
This legal requirement shall be translated into the contractual / legal obligations between the competent public authorities (authorising / contracting entities) and the utilities owners/managers..

The legislative obligations will, therefore, make the utilities’ owners / operators accountable and financially liable for the accuracy of the information provided to the contracting authorities before the launch of a public procurement procedure. In case of deviations between the information provided and reality generating additional costs,The contracting authority will be able to recover those from the utilities’ owners/operators.