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PUBLIC PROCUREMENT:
- Verifications – Audits of Operations (checklists)
- Main irregularities
Audit and Control Unit
27-05-2014
maio  2014
INTERVENIENTS / ACTORS
Beneficiaries
•
•
Management Authority /
Intermediate Bodies
Cohesion & Development
Agency
Application Form - Information about the Public Procedures
related with the operation – on going procedures and finished
procedures
Sends to MA relevant tender documents
An MA example…
• Internal control procedures - Validation of expenses includes
Checks for all Public Procurement Procedures, with application
of the Commission guidelines for determining financial
corrections, if financial corrections are necessary.
• Guidelines to the beneficiaries with alerts for the main audit
findings on Public Procurement matters
Certifying Authority
• Attest that all Public Procurement Procedures are checked
before expenditure is certified to the Commission
Audit and Control Unit – Segregated Control Structure
• Public Procurement checks - Audits on operations
Audit Authority
- European Court Accounts
- European Commission
•
Public Procurement checks - System Audits / Specific Audits
•
Audit opinions on the work of other entities
-2-
maio  2014
AUDIT AND CONTROL UNIT - CDAGENCY
 Responsibility for audits of operations: ERDF, CF, ESF
 How do we check PPP (Public Procurement Procedures)?

Procedures Manual

Public Procurement specific checklists approved by AA
-3-
maio  2014
PP specific checklists approved by AA
 Entity Framework / Scope / Extent
 Contract Framework / Scope / Extent
 Direct Award (Simplified / Regular)
 Open Tender Procedure
 Restricted Tender Procedure with pre-qualification
 Framework Agreements
 Negotiated procedure
 Competitive dialogue
-4-
maio  2014
Main Contents - PP specific checklists approved by AA
Checklists are organized considering the two main phases of the public procurement procedures:
1 – Pre-contractual procedures
2 – Contract performance procedures
Auditing operations are based on the documentation collected from the beneficiary’s records and
information’s.
1 – Main concerns while auditing the pre-contractual procedures :
A - Qualified authority
B – Advertising




Non adequate and/or inexistent degree of publicity;
Non-compliance with time limits for receipt of tenders or request to participate;
Non-compliance with extending time limits advertising actions;
Insufficient detail of selection and award criteria;
C – Artificial splitting of works/services/supplies
 Non-compliance of the whole set of works/services/supplies regarding the chosen
contract notice (requiring publication on Official Journal of the European Union);
-5-
maio  2014
Main Contents - PP specific checklists approved by AA
1 – Main concerns while auditing the pre-contractual procedures (cont):
D – Tender Documentation
 Non-compliance with all legal binding required information;
 Unlawful and/or discriminatory selection and/or award criteria;
 Discriminatory technical specifications
E – Tender Evaluation



Unlawful evaluation of each bid;
Rejection of abnormally low tenders wihtout justification
Unclear, unjustified and lacking transparency of the score given to each bid;
F – Contract
 Qualification documents of the chosen supplier;
 Compliance of the contract terms with the tender documentation;
-6-
maio  2014
Main Contents - PP specific checklists approved by AA
2 – Main concerns while auditing the contract performance procedures :
A – Start up procedures


Compliance with the committed timings;
Compliance with the formal procedures regarding the start of works;
B – On going contract procedures




Illegal award of additional works/services/supplies;
Additional works/services/supplies exceeding the limits laid down in the contract
provisions;
Illegal suppression of works/services/supplies;
Revision of prices;
C – Final contract procedures


Due time for works/services/supplies deliverance;
Final contract evaluation (values/works/failings/etc)
-7-
maio  2014
Main Results / Findings on NSRF
1 - ERDF/CF :
Main Findings
Incorrect Procedure (wrong choice)
e.g. due to
• artificial splitting of contracts
• additional works/services that didn’t result of unforeseen circumstances
• procedure without prior call for competition/Direct award
Non adequate degree of publicity (mainly due to inexistent publicity of extending
time limits)
Illegal Award Criteria
Principles of the Treaty (equal treatment, non discrimination, transparency,
proportionality)
-8-
maio  2014
Practical examples - NSRF (Corrections based on EU guidelines)
1 - ERDF / CF
- Example 1: Principles of the Treaty
The content of the Preliminary and Final Reports, which specifies the tenders analysis, doesn´t allow to determine the way that
the “Commission of proposals” reached the final score (the way the qualitative judgment in technical merit was transformed
into a quantitative expression, relevant and indispensable to assign a score to the proposals).
Subsequently, it was considered that the principles of equality, transparency, fairness and competition, were violated, thus
should be applied to the expense subject to co-financing a financial correction of 25%, in accordance with paragraph 16 of the
Financial Corrections table annexed to the EC Decision C (2013) end of December 19, 2013 9527.
-9-
maio  2014
Practical examples - NSRF (Corrections based on EU guidelines)
1 - ERDF / CF
- Example 2: Artificial Splitting
-
There were 5 contracts, awarded by direct setting, with benefits of the same type (public works contracts), making up, in the
whole set, a total charge of 556.578,96€;
The respective dates of grant reveal a time gap of about 4 months between the first and the last contract;
Al the works appear in Multiannual Investment Plan of the year of 2009, approved at town meeting;
As to its geographical location, it should be noted that the 5 contracts were limited to municipal perimeter (either in avenues
within the city, or in its adjacent roads).
Given the nature of the works (repair and paving of roads), its location, the fact that they are all included in a Multiannual
Investment Plan, approved by the competent municipal qualified authority, and as a result, in the prior knowledge of the beneficiary,
to which must be added a non-relevant time gap in a way that put the concomitance of these endeavors, one cannot fail to
considered that there was a splitting of the whole set of expenses, embodied in the work breakdown into 5 partial procedures.
All facts considered, given the nature of the work, it was mandatory the adoption of a public tender procedure for the whole set of
the expenditure regarding the 5 contracts, in respect of contracts under applicable law and by the principles of transparency,
equality and competition.
Subsequently, it was not given fulfilment to the provided in article 22 of the CCP (Article 9(3) of the Directive 2004/18/EC), so the
situation in question is considered an irregularity for the purposes of co-financing .
Thus, considering the guidelines for determining Financial corrections to be applied to the Co-financed Expenditure by the
structural funds and the Cohesion Fund (COCOF table 07/003703-EN), it is considered to be applying a correction of 25% the
expenditure in reference (Nr. 21 Type of irregularity – failure of an appropriate degree of publicity and transparency) – previous
guidelines
- 10 -
maio  2014
Main Results / Findings on NSRF
2 – European Social Fund :
TOTAL ERRORS on ESF, related to Public Procurement
FINANCIAL CORRECTIONS
ESF / NSRF - TOTAL
(until April/2014)
FUNDAMENTALS
FREQUENCY
(%)
AMOUNT
(%)
0,57%
6,71%
100%
100%
(……)
16 - ………………
17 - Failures / Infringements in public procurement
18 - ………………
(……)
TOTAL
- 11 -
maio  2014
Main Results / Findings on NSRF
2 – European Social Fund :
 Annex II B – Directive 2004/18/CE (31/03/2004) altered by Annex VII – Reg.
(EC) n. 2013/2008 (28/11/2007)
Category N.
…
24
…
Subject
…
Education and
vocational education services
…
CPC
Reference
N.
…
92
…
CPV
Reference N.
…
From 80100000-5
to 80430000-7
…
Partially
excluded from
the application
of public
procurement
procedures
 National Law – DL 18/2008 (29/01/2008)
§ f), n. 4, Article 5 - DL 18/2008 - Education and vocational training services
- 12 -
maio  2014
Main Results / Findings on NSRF
2 – European Social Fund :
Contracts which have as their object services listed in
Annex II B shall be subject solely to Article 23Technical specifications and Article 35(4) – Notice
after the award of the contract.
Partially excluded from the application of public procurement procedures
The contracts having for object “Education and vocational education services” :
Listed as Category 24, in the ANNEX VII to the COMMISSION REGULATION (EC) Nº 213/2008 of 28 November 2007 amending Regulation (EC) Nº 2195/2002 of the European
Parliament and of the Council on the Common Procurement Vocabulary (CPV) and Directives 2004/17/EC and 2004/18/EC of the European Parliament and of the Council on
public procurement procedures, as regards the revision of the CPV refering to services from CPV reference n.º 80100000-5 to CPV reference n.º 80660000-8 (except 80533000-9,
80533100-0, 80533200-1), listed in the ANNEX I to the mentioned Regulation
80100000-5 Primary education services
80110000-8 Pre-school education services
80200000-6 Secondary education services
80210000-9 Technical and vocational secondary
education services
80211000-6 Technical secondary education
services
80212000-3 Vocational secondary education
services
80300000-7 Higher education services
80310000-0 Youth education services
(…)
80400000-8 Adult and other education services
80410000-1 Various school services
maio  2014
(…)
80420000-4 E-learning services
80430000-7 Adult-education services at university level
(…)
80500000-9 Training services
80510000-2 Specialist training services
80511000-9 Staff training services
(…)
80521000-2 Training programme services
80522000-9 Training seminars
80530000-8 Vocational training services
(…)
- 13 -
Main Results / Findings on NSRF
2 – European Social Fund :
MAIN ERRORS on ESF, related to Public Procurement:
 Lack of publication of contract notice
(N. 1 of Commission Decision 9257, of
19/12/2013)
 Artificial splitting of works / services / supplies contracts
(N. 2 of
Commission Decision 9257, of 19/12/2013)
- 14 -
maio  2014
Practical examples - NSRF (Corrections based on EU guidelines)
2 - European Social Fund
Example 1 - Lack of publication
-
Contracting Authority and Open tender Procedure (Year: 2012)
-
Contract Amount = 250.000€ (> Community threshold amount for public contracts, applied on 2012 = 200.000€)
-
Notice: Portuguese Official Journal + Portuguese newspaper of wide circulation
-
Notice after the award of the contract: Portuguese Official Journal
MANDATORY:
-
Notice: Official Journal of the European Union + Portuguese Official Journal
-
Notice after the award of the contract: Official Journal of the European Union
FINANCIAL
CORRECTION =
25% of Contract
Amount
(according to N.1 of Commission
Decision 9257, of 19/12/2013 )
- 15 -
maio  2014
Practical examples - NSRF (Corrections based on EU guidelines)
2 - European Social Fund
Example 2 - Incorrect procedure in relation to the amount involved
-
Contracting Authority and DIRECT AWARD (Year: 2009)
-
Purchase of a multifunctional device: copying, printing and scanning (for 3 years)
-
Contract Amount = 72.000€ (Portuguese threshold amount for Direct Award = 75.000€)
-
Contract Price: Fixed Amount – 72.000€
Variable amount depending on number of copies (0,03€/copy)
AA understanding:
-
“… the maximum value of the contract to be awarded is the maximum value of the economic benefit
that can be obtained by the tenderer in the execution of all services which constitute its object …”
-
AA estimated the total value of the contract in 145.000€  OPEN TENDER
< Community Threshold
but
> Portuguese Threshold
maio  2014
FINANCIAL
CORRECTION =
10% of Contract
Amount
(according to Portuguese
Audit Authority Decision)
- 16 -
Thank you very much
abril  2014