2. Basic rules

2.1. Overview

Contracts under procurement and grants are awarded according to strict rules. These help ensuring that suitably qualified contractors and grant beneficiaries are chosen without bias and that the best price?quality ratio or the best price is obtained, with the full transparency appropriate to the use of public funds.

Procedures established by the European Commission for procurement and award of grants under the relevant European Union external financing programmes are consolidated in this practical guide. Deviations from standard procedures in this practical guide such as exceptions and derogations, as well as prior approvals, events to be reported and non-compliance events have to be adopted in compliance with internal procedures.

Before starting any procurement or grant procedure, the budgetary commitment must have been approved by a financing decision/action plan[1] and, where appropriate, reflected in a subsequent financing agreement. The funds must be available, except in the case of procedures with a ‘suspensive clause’ (see Section 2.5.9.).

2.2. Management modes

Procurement or grant award procedures for projects financed under EU external financing instruments vary according to the different arrangements for implementing the project (referred to as ‘management modes’)[2].

There are different ways to implement the general budget of the EU or the European Development Fund (EDF) funds, depending on the degree of delegation of a number of budget implementation tasks (such as conclusion of contracts, their operational and financial management, audit, evaluation, etc.).

There are three different management modes: direct management, indirect management and shared management.

The choice of management mode is an essential element of the financing decision/action plan and it is reflected in the corresponding documents (e.g. the ‘action document’ for the relevant financing decision/action plan).

2.2.1. Direct management

The European Commission is in charge of all EU budget implementation tasks, which are performed directly by its departments either at Headquarters or in the EU delegations or through EU executive agencies[3].

Therefore, in direct management, the European Commission (or the EU executive agencies) is the contracting authority and takes decisions on behalf and for the account of the partner countries.

The contracts are concluded directly by the European Commission, acting on behalf of the partner country. The European Commission is responsible for the entire cycle leading to contract signature (issuing calls for tenders and calls for proposals, publication, establishing shortlist in restricted procedures, evaluation, award and contract signature, etc.).

2.2.2. Indirect management

Under indirect management the European Commission entrusts budget implementation to[4]:

• third countries[5] (or to bodies designated by them);

• international organisations and their specialised agencies;

• the European Investment Bank or the European Investment Fund;

• EU decentralised agencies;

• public law bodies;

• private law bodies with a public service mission to the extent that they are provided with adequate financial guarantees;

• bodies established in a Member State, governed by the private law of a Member State or Union law and eligible to be entrusted, in accordance with sector-specific rules, with the implementation of Union funds or budgetary guarantees, to the extent that such bodies are controlled by public law bodies or private law bodies with a public service mission and are provided with adequate financial guarantees in the form of joint and several liability by the controlling bodies or equivalent financial guarantees and which may be, for each action, limited to the maximum amount of the Union support.

This practical guide applies to the first case, i.e. when the European Commission entrusts budget implementation to partner countries[6]. In this case, the contracts are concluded by the contracting authority designated in a financing agreement, i.e. the government or an entity of the partner country with legal personality.

In case of indirect management with other bodies listed above, the rules and procedures of that entity shall apply instead of this practical guide based on the positive outcome of a prior ex ante pillar assessment[7] (in relation to its accounting systems, internal control, independent external audit, grants, procurement, exclusion from access to funding, publication of information on recipients, protection of personal data)[8].

Under indirect management with partner countries, which is covered by this practical guide, two modalities[9] are possible:

Indirect management with ex ante controls

Decisions on the procurement and award of contracts are taken by the partner country, acting as contracting authority, in line with the requirements set out in this practical guide and subject to the prior approval of the European Commission.

The contracts are signed by the contracting authority of the partner country and endorsed by the European Commission.

The relevant steps leading to contract award need the prior approval of the European Commission.

Prior to the launch of the award procedure, the contracting authority must submit the documents (prior information notice (not compulsory), contract notice, additional information about the contract notice, tender dossier or grant award file) to the European Commission for approval, the European Commission usually being the EU Delegation. The European Commission verifies that these have been drafted in accordance with the procedures and templates laid down in this practical guide. The contracting authority is then responsible for drawing up shortlists (for restricted procedures), issuing the calls for tenders and calls for proposals, receiving application documents, chairing evaluation committees and deciding on the results of the procedure. Before signing contracts, the contracting authority submits the results of the evaluations to the European Commission for prior approval.

No prior approval is required in certain cases referred to in the practical guide to procedures for programme estimates[10].

Indirect management with ex post controls

In indirect management with ex post control, the prior approval by the European Commission is not required.

Indirect management with ex post controls is used in two instances: (i) programme estimates, for procurement award procedures below the thresholds defined in the programme estimate guide; and (ii) under IPA III where the approach is to progressively transition from ex-ante towards ex-post controls.

2.2.3. Shared management

The European Commission delegates implementation tasks to the EU Member States[11]. This mode is rarely used in the implementation of external actions, but there are a few cases such as joint operational programmes on cross-border cooperation implemented by a joint managing authority (for instance, in the 2014-2020 MFF, under the European Neighbourhood Instrument (ENI)[12] or the Instrument for Pre-accession Assistance (IPA II))[13]. In the 2021-2027 MFF however, under IPA III, shared management is not provided for.

2.2.4. Conclusion

This practical guide applies to direct and indirect management with partner countries, except for those specific cases where the European Commission allows partner countries to use other procedures depending on a prior positive assessment of such procedures[14].

The European Commission’s involvement in contracts signed by the partner countries under indirect management is to authorise the financing of the contracts and check, notably with reference to established checklists, that the procedures, the implementation of the contracts and the expenditure are correctly carried out. If the procedures established in this practical guide (or whatever procedure the European Commission decides must be used) are not followed, the expenditure incurred on the related operations may be found ineligible for EU financing. The European Commission’s intervention is limited to checking whether the conditions for EU financing have been met.

In no case will this intervention aim at compromising the principle according to which these contracts are drafted under the national legislation and concluded only by the contracting authority from the partner country. Participants and recipients do not possess any form of contractual relationship with the European Commission during or after the implementation of the contracts. Their only contractual relationship is with the contracting authority. A contracting authority’s decision may not be replaced by a decision taken by the European Commission. The contracting authority assumes full responsibility for its actions and will be accountable for those actions in any subsequent audit or other investigation.

The box below summarises the control procedures that the European Commission must follow for direct and indirect management with the partner country.

2.3. Participation in award procedures

Participation in procurement and grant award procedures financed by any of the external financing instruments described in Chapter 1, is governed by a set of rules and principles intended to ensure the legality and regularity of the procedures as well as the compliance with sound financial management.

Eligibility criteria such as the rule of nationality and origin determine the conditions for participating in award procedures and are essential requirements that each participant must comply with.

2.3.1. The rule of nationality

Participation in procurement and grant award procedures is open to all natural persons who are nationals of, and all legal persons who are effectively established in a Member State of the European Union or in a country or territory eligible according to the external financing instrument under which the specific project is financed. Participation is also open to international organisations. For each external financing instrument, specific rules on nationality apply[16].

For award procedures financed by a MFF 2014-2020 external financing instrument or the EDF please refer to Section 2.3.1 of PRAG 2021 and Annex a2a.

The paragraphs below lay down the applicable rules for award procedures financed by a MFF 2021-2027 external financing instrument.

2.3.1.1. General rules

a) For projects financed under the: (i) DOAG; (ii) NDICI-GE geographic programmes; (iii) NDICI-GE Civil Society Organisations thematic programme or (iv) NDICI-GE Global Challenges thematic programme: participation is open to all natural persons who are nationals of and legal persons (participating either individually or in a grouping) which are effectively established in a Member State of the European Union or in an eligible country or territory as defined under Article 28(1) of NDICI-GE.

b) For projects financed under the: (i) NDICI-GE Human Rights and Democracy thematic programme; (ii) NDICI-GE Peace, Stability and Conflict Prevention thematic programme; or (iii) NDICI-GE rapid response actions: participation is open without limitations without prejudice to the limitations inherent to the nature and objectives of the action.

c) For projects financed under the EINSC participation is open to all natural persons who are nationals of and legal persons (participating either individually or in a grouping) which are effectively established in a Member State of the European Union or in an eligible country or territory as defined under Article 11 of EINSC.

d) For projects financed under IPA III participation is open to all natural persons who are nationals of and legal persons (participating either individually or in a grouping) which are effectively established in a Member State of the European Union or in an eligible country or territory as defined under Article 10 of IPA III.

e) For projects financed under the Ukraine Facility, participation is open to all natural persons who are nationals and legal persons (participating either individually or in a grouping) which are effectively established in a Member State of the European Union or in an eligible country or territory as defined under Article 11 of the Ukraine Facility.

Annex a2a1 contains a list of all eligible countries or territories per each MFF 2021-2027 external financing instrument.

Irrespective of the external financing instrument under which the respective project or programme is to be financed, where an agreement on widening the market for procurement of goods or services to which the Union is party applies, the procurement procedures for contracts shall also be open to natural and legal persons established in a third country other than those specified in the basic instruments governing the cooperation sector concerned, under the conditions laid down in that agreement[17].

2.3.1.2. Extension of the rule of nationality

In addition to the basic rules explained allow, each external financing instruments extends the eligibility to the following projects:

1. For actions financed under the NDICI – GE, the DOAG or IPA III:

• For actions jointly co-financed by an entity, or implemented in direct or indirect management with entities as referred to in points (c)(ii) to (viii) of Article 62(1) of the Financial Regulation, the eligibility rules of those entities shall also apply[18].

• Where donors provide financing to a trust fund established by the Commission or through external assigned revenues, the eligibility rules in the constitutive act of the trust fund or, in the case of external assigned revenues, in the agreement with the donor, shall apply[19].

• For actions financed under the NDICI-GE and under another Union programme, eligible entities under any of those Union programmes shall be considered eligible[20].

• For multi-country actions, legal entities who are nationals of and, in the case of legal persons, who are also effectively established in, the countries and territories covered by the action may be considered eligible[21].

2. For projects financed under the EINSC:

• For actions jointly co-financed by an entity or implemented under direct management or indirect management with entities listed in points (c)(ii)–(viii) of Article 62(1) of the Financial Regulation, the eligibility rules of those entities shall also apply[22].

• Where donors provide financing to a trust fund established by the Commission or through external assigned revenues, the eligibility rules in the constitutive act of that trust fund or in the agreement with the donor in the case of external assigned revenues shall apply[23].

• For actions financed under the European Instrument for International Nuclear Safety Cooperation and under another Union programme, eligible entities under any of those programmes shall be considered eligible[24].

3. For projects financed under the Ukraine Facility:

• For activities jointly co-financed by an entity or implemented in direct or indirect management with entities referred to in Article 62(1), first subparagraph, point (c), of the Financial Regulation or for activities implemented by Ukrainian entities under Chapter III of the Ukraine Facility, the eligibility rules of those entities or of Ukraine shall also apply including the rules on restrictions provided for under Article 11(7) of the Ukraine Facility[25].

• Where additional contributions are provided in accordance with Article 7 of the Ukraine Facility through external assigned revenues, the eligibility rules in the agreement with the person providing the additional contribution shall apply, including the rules on restrictions provided for under Article 11(7) of the Ukraine Facility [26].

2.3.2. Rules for experts and international organisations

Nationality of experts and other natural persons employed or legally contracted does not have to follow the nationality rules[27]. Therefore, unless otherwise provided for in the applicable financing agreement, experts recruited or otherwise legally contracted by an eligible contractor/sub?contractor, may be of any nationality.

Likewise, the nationality rule does not apply to international organisations participating in a procurement or grant award procedure.

For grants, the nationality rule does not apply to staff working on the action and employed or sub-contracted by the grant beneficiary(ies) (coordinator and co-beneficiaries, including any affiliated entities).

2.3.3. How to verify compliance with the nationality rules

For the purpose of verifying compliance with the nationality rules, the tender dossier and the guidelines for applicants require the following from participants:

• natural persons must state the country of which they are nationals;

• legal persons must state the country in which they are established and provide evidence of such establishment by presenting the documents required under that country’s law.

If the contracting authority (or evaluation committee) suspects that a participant does not comply with the nationality rules, it must ask the participant to provide evidence demonstrating actual compliance with the applicable rules.

To demonstrate their actual compliance with the ‘establishment’ criterion, legal persons have to demonstrate that:

• the legal person is established under the law of an eligible State, and

• it is effectively established: its real seat is within an eligible State. ‘Real seat’ must be understood as the place where its managing board and central administration, or its principal place of business, are located[28].

The decision on whether or not participants are eligible is taken by the contracting authority (usually on the basis of the information and evidence provided during the evaluation).

2.3.4. The rules of origin

Rules of origin determine from which countries goods and materials supplied under a procurement or a grant contract may originate.

In case of procurement contracts, these rules apply to all goods to be delivered under a supply contract as do materials, goods and components to be incorporated or to form part of the permanent works under a works contract.

Goods purchased by the contractor for use during the execution of the contract (such as machinery used by a supply contractor for testing and installing the goods supplied, equipment used by a works contractor for building a road[29], computer(s) used by a service contractor to draft a study) are not subject to the rule of origin.

It is only when the contract explicitly states that at the end of the contract the ownership of the goods is transferred from the contractor to the contracting authority (in the case of procurement contracts) or transferred by the grant beneficiary to another entity/person or retained by him (in the case of grant contracts), that these goods are subject to the rule of origin.

For projects financed under MFF 2014-2020 external financing instruments or EDF please refer to PRAG 2021.

For projects financed under NDICI-GE, DOAG or IPA III supplies and materials may originate from any country. In the case of the EINSC and the Ukraine Facility, goods and materials must originate from an eligible country designated (please refer to Section 2.3.1.).

2.3.5. Definition of ‘origin’

The term ‘origin’ is defined in the relevant EU legislation on rules of origin for customs purposes: Regulation (EU) No 952/2013 of the European Parliament and of the Council of 9 October 2013 laying down the Union Customs Code[30], and the Code’s implementing provisions: Commission Delegated Regulation (EU) 2015/2446 of 28 July 2015 supplementing Regulation (EU) No 952/2013 of the European Parliament and of the Council as regards detailed rules concerning certain provisions of the Union Customs Code[31] and Commission Implementing Regulation (EU) 2015/2447 of 24 November 2015 laying down detailed rules for implementing certain provisions of Regulation (EU) No 952/2013 of the European Parliament and of the Council laying down the Union Customs Code[32].

The country of origin is not necessarily the country from which the goods were shipped and supplied. Two basic concepts are used to determine the origin of goods, namely the concept of ‘wholly obtained’ products and the concept of products having undergone a ‘last substantial transformation’:

• If only one country is involved in the production, the ‘wholly obtained’ concept will be applied. In practice, these goods wholly obtained in a single country must be regarded as having their origin in that country. This will be restricted to mostly products obtained in their natural state and products derived from wholly obtained products.

• If two or more countries are involved in the production of goods, it is necessary to determine which of those countries confers origin on the finished goods. For this purpose, the concept of ‘last substantial transformation’ is applied. In general, the criterion of last substantial transformation is expressed in three ways:

• by a rule requiring a change of tariff (sub)heading in the HS nomenclature (i.e. the Nomenclature governed by the Convention on the Harmonized Commodity Description and Coding System);

• by a list of manufacturing or processing operations that do or do not confer on the goods the origin of the country in which these operations were carried out;

• by a value added rule, where the increase of value due to assembly operations and incorporation of originating materials represents a specified level of the ex-works price of the product.

2.3.6. How to verify compliance with the rules of origin

For projects financed under NDICI-GE, DOAG or IPA III supplies and materials may originate from any country and therefore no verification of origin is required: no declaration of origin is required.

However, such verification is required for projects financed under MFF 2014-2020 external financing instruments or EDF; the EINSC and the Ukraine Facility. The following paragraphs apply to these.

When submitting its tender, if the rules of origin apply, the tenderer must state expressly that all the goods meet the requirements concerning origin and must state the country(ies) of origin. When tendering for systems comprising more than one item, the origin of each item in the system must be specified. The tenderer is bound by the declaration of origin she/he submits. The tenderer is obliged to verify that the provided information is correct. Otherwise, the tenderer risks to be excluded because of negligently misrepresenting information. The tenderer may be requested to provide documents supporting the stated origin. In this case, the tenderer must provide a declaration of origin or additional information considering that the issuing authority may refuse to issue a certificate of origin at tendering stage without presentation of commercial invoices.

The declaration of origin must be submitted at the latest during implementation of the contract when the certificate of provisional acceptance is requested. Failing this, the contracting authority will not make any further payment to the contractor. Exceptionally, other substantiating documents can be accepted by the contracting authority instead of the aforementioned declarations if the contractor justifies that it is impossible to provide declarations of origin.

Declarations of origin must be issued by the competent authorities of the goods’ or supplier’s declared country of origin (for example the chamber of commerce) and comply with the international agreements to which that country is a signatory. However, declarations of origin are not exhaustive proof of origin, and should not be regarded as a legal proof, but as useful element for determination of the origin, which may, in case of doubts, facilitate further checks.

It is up to the contracting authority to verify compliance with the rules of origin. Where there are serious doubts about the authenticity of a declaration of origin or the information it contains (e.g. because of discrepancies in the document, spelling errors, etc.), the contracting authority should contact the issuing authority to have the authenticity of the documents submitted and/or the information it contains confirmed. Declarations issued by an authority, other than the one located at the place of declared origin, should be investigated carefully. The contracting authority may also carry out on-the-spot checks of compliance with the origin rules, preferably before the issuance of the provisional acceptance certificate.

For EDF procurement, supplies originating in an OCT are regarded as originating in the European Union.

2.3.7. Derogations from the rules of nationality and origin

External financing instruments or the Financial Regulation provide for the possibility to derogate from the general rules of nationality or origin on a case-by-case basis in order to further (a) extend or (b) limit the eligibility of certain persons/goods on grounds laid down in those instruments.

The decision to derogate is taken by the European Commission before the award procedure is launched. In principle, it is not possible to derogate from the rules of nationality or origin to allow only one or a group of countries to become eligible unless it is duly motivated in the request for derogation.

The derogation must be mentioned in the contract notice (if published) and in the guidelines for applicants (grants).

2.3.7.1. Extension

(i) In duly substantiated cases, the European Commission may extend eligibility to persons or goods from an ineligible country.

For projects financed under MFF 2014-2020 external financing instruments or EDF please refer to PRAG 2021. For projects financed under award procedures under MFF 2021-2027 external financing instruments, extension to the rules of nationality may be granted on the grounds of[33]:

• urgency;

• unavailability of services in the markets of the countries or territories concerned;

• other duly substantiated cases where the application of the eligibility rules would make the realisation of an activity impossible or exceedingly difficult.

As regards rules of origin, it is possible to extend such eligibility for actions under the Ukraine Facility where supplies and materials cannot be sourced under reasonable conditions in any of the eligible countries[34]. No derogation from the rules of origin is possible for actions under EINSC.

(ii) Countries for which reciprocal access to external funding is established by the Commission: the Commission may grant access, for a limited period of at least one year, whenever a country grants eligibility on equal terms to entities from the Union and from countries eligible under NDICI- GE, or the EINSC, or IPA III. In the case of the Ukraine Facility that reciprocal access is limited to countries which provide a level of support to Ukraine comparable to that provided by the Union taking into account the size of their economy.

2.3.7.2. Limitation

For projects financed under MFF 2014-2020 external financing instruments or EDF please refer to PRAG 2021.

For grants financed under MFF 2021-2027 external financing instruments[35], it is also possible to limit eligibility rules where this is required by the nature and the objectives of the action and as necessary for its effective implementation.

The limitation can be made with respect to the nationality, geographical location or nature of applicants and does not require a prior approval / event to be reported.

In case of supplies/materials under projects financed under the EINSC, it is also possible to restrict the rules of origin, where such restrictions are required on account of the specific nature and the objectives of the action and where they are necessary for its effective implementation[36].

For projects financed under the Ukraine Facility, the rules of nationality and origin may be restricted with regard to the nationality, geographical location or nature of the legal entities participating in procurement procedures as well as with regard to the geographical origin of supplies and materials, in the following cases:

1. where such restrictions are required on account of the specific nature or objectives of the activity or specific award procedure or where those restrictions are necessary for the effective implementation of the activity;

2. where the activity or specific award procedures affect security or public order, in particular concerning strategic assets and interests of the Union, its Member States, or Ukraine, including the protection of the integrity of digital infrastructure, communication and information systems, and related supply chains[37].

The Financial Regulation[38] also allows, for specific award or public order, in particular concerning strategic assets and interests of the Union and/or its Member States, including the protection of the integrity of digital infrastructure, communication and information systems, and related supply chains, to set specific conditions. Those conditions shall be strictly limited to what is necessary to protect security or public order of the Union and/or its Member States. The financing decision/action plan covering the award procedure shall indicate whether the award procedure affects security or public order[39].

The specific conditions may apply to participation in award procedures and to the full life cycle of the resulting legal commitment and may concern:

1. the entity, in particular the criteria for access to the procedure or eligibility based on the country of establishment of the participants, including the contractor or beneficiary and the affiliated entities and any subcontractors, as well as with respect to direct or indirect control of any of those participants by public or private entities of a third country;

2. the activity, in particular with respect to the country of origin of the equipment, goods, supplies or services, as well as with respect to the place of performance, which may be limited to Member States;

3. additional security requirements for the entities and activities, in particular conditions based on a security risk assessment of the equipment, goods, supplies or services, manufacturer, contractor, beneficiary, the affiliated entities or any subcontractors.

2.4. EU restrictive measures, exclusion criteria and rule of law conditionality

2.4.1. EU restrictive measures

EU Restrictive measures (‘EURMs’) are an essential tool in the EU’s common foreign and security policy (‘CFSP’) to prevent conflict or respond to emerging or current crises. EURMs are designed to be proportionate to the objectives they seek to achieve and are targeted at governments, individuals, industries or entities that are responsible for actions that undermine international security and stability.

The EU has several sanctions regimes in place at any one time. Some are mandated by the United Nations Security Council, whereas others are adopted autonomously by the EU.

2.4.1.1. Legal Framework and Compliance

Article 215 of the Treaty on the Functioning of the European Union (TFEU) provides the legal basis for the interruption or reduction, in part or completely, of the European Union’s economic and financial relations with one or more third countries, where such restrictive measures are necessary to achieve the objectives of the CFSP.

By means of Council Decision taken on the basis of Article 29 of the Treaty on European Union (TEU) and related implementing Regulation pursuant to Article 215 TFEU, the EU restrictive measures are directly applicable in the European Union. Hence, when implementing the EU budget, the Commission must give effect to EU restrictive measures.

The same obligation is implicitly imposed onto persons or entities entrusted with indirect management by virtue of Article 62(1)(c) FR, which requires implementing partners to ensure that funds are only disbursed in accordance with EU law, including therefore the implementation of EU restrictive measures.

The obligation to ensure compliance with the EU restrictive measures applies:

• to the EU institutions and bodies and to all EU contracting partners;

• not only at the initial distribution of funds but also down to the level of final beneficiary.

Evaluation committees must ensure that there is no detection of a recommended tenderer (and consortia members thereof) or grant applicant, co-applicants, affiliated entities in the list of EU restrictive measures, at the latest before award of a contract.

Likewise, grant beneficiaries and contractors must ensure that there is no detection of subcontractors, experts, contractors, recipients of financial support to third parties, or any person to whom funds or financial resources would be made available directly or indirectly, in the lists of EU restrictive measures.

2.4.1.2. Exemptions and Derogations

EURMs may contain two types of exception mechanisms to the prohibitions that they establish: exemptions and derogations.

An exemption is a provision carving out certain activities from the scope of application of the general prohibition. Whenever an activity falls within the scope of an exemption, an operator may carry out the exempted activity without any prior authorisation. However, in case of ex post verification, operators must be able to demonstrate that the activity in question did comply with all the conditions required for the exemption to apply.

Similarly, derogations to EURMs may be available in the legal act establishing the prohibition. Derogations mean that a prohibited action can proceed only after a National Competent Authority has granted authorisation. National Competent Authorities can provide the necessary guidance as to how to obtain any available derogation. The details of each National Competent Authority are listed in annex to the relevant EURM legal text.

2.4.1.3. Resources

The European Commission has created tools to assist the uniform implementation of EURMs, including the EU Sanctions Map (available from https://sanctionsmap.eu), their financial sanctions database and their guidance notes and opinions.

The European Commission also provides information upon request for information and oversees the reporting obligations of the Member States regarding implementation issues, numbers of assets freezes and derogations from the sanctions.

The EU Sanctions Map provides comprehensive details of all EU sanctions regimes and their corresponding legal acts, including those regimes adopted by the UN Security Council and transposed at EU level.

Additionally, the European Commission manages a consolidated list (available from https://webgate.ec.europa.eu/fsd/fsf#!/files) of persons, groups and entities subject to EU financial sanctions, which is updated whenever necessary.

Please note that the EU Sanctions Map and other resources prepared by the European Commission are IT tools for identifying the sanctions regimes. The source of the sanctions stems from legal acts published in the Official Journal of the EU. In case of discrepancies between the published legal acts and the updates on the EU Sanctions Map website and elsewhere, it is the Official Journal version that prevails.

2.4.2. Exclusion criteria

In the Financial Regulation, the provisions on early detection and exclusion system (EDES), including exclusion criteria, are contained in Articles 137 to Article 148. EDES is a system to facilitate the detection of persons and entities that pose a risk to the European Union’s financial interests. It aims at excluding from receiving European Union funds or participating in grant or procurement procedures the entities or persons found in specific exclusion situations (also called ‘exclusion grounds’).

The EDES applies to the following persons:

1. participants in award procedures and recipients of Union funds;

2. entities on whose capacity the candidate or tenderer intends to rely or subcontractors of a contractor;

3. any person or entity receiving Union funds where the budget is implemented in indirect management on the basis of the information provided;

4. guarantors;

5. participants or recipients on which entities implementing the budget in shared management have provided information;

6. sponsors[40];

7. beneficial owners[41] and any affiliate of the person or excluded entity as referred to in Article 138(6) FR;

8. natural persons as referred to in Article 138(5), points (a) to (c) FR[42].

Further reference to the term “person” refers to the above-mentioned EDES’ subjects.

The exclusion is decided by the Commission on the basis of a final judgment or a final administrative decision or, in the absence of such a judgment or decision, on the basis of established facts or findings and their preliminary classification in law contained in the recommendation of the EDES panel[43] referred to in Article 145 FR.

2.4.2.1. Exclusion criteria from participation in procurement and grant procedures

A person will be excluded from participation in procurement and grant procedures if:

1. it is bankrupt, subject to insolvency or winding-up procedures, where its assets are being administered by a liquidator or by a court, where it is in an arrangement with creditors, where its business activities are suspended, or where it is in any analogous situation arising from a similar procedure provided for under national laws or regulations;

2. it has been established by a final judgment or a final administrative decision that the person is in breach of its obligations relating to the payment of taxes or social security contributions in accordance with the applicable law;

3. it has been established by a final judgment or a final administrative decision that the person is guilty of grave professional misconduct by having violated applicable laws or regulations or ethical standards of the profession to which the person belongs, or by having engaged in any wrongful conduct which has an impact on its professional credibility where such conduct denotes a wrongful intent or gross negligence, including, in particular, any of the following:

1. fraudulently or negligently misrepresenting information required for the verification of the absence of grounds for exclusion or the fulfilment of eligibility or selection criteria or in the performance of a contract;

2. entering into agreement with other persons with the aim of distorting competition;

3. violating intellectual property rights;

4. unduly influence or attempting to unduly influence the decision-making process to obtain Union funds by taking advantage, through misrepresentation, of a conflict of interest involving any financial actors or other persons referred to in Article 61(1) FR;

5. attempting to obtain confidential information that may confer upon it undue advantages in the award procedure;

6. incitement to discrimination, hatred or violence against a group of persons or a member of a group or similar activities that are contrary to the values on which the Union is founded enshrined in Article 2 TEU, where such misconduct has an impact on the person or entity’s integrity which negatively affects or concretely risks affecting the performance of a contract;

4. it has been established by a final judgment that the person is guilty of any of the following:

1. fraud, within the meaning of Article 3 of Directive (EU) 2017/1371 of the European Parliament and of the Council of 5 July 2017 on the fight against fraud to the Union's financial interests by means of criminal law[44] and Article 1 of the Convention on the protection of the European Communities’ financial interests drawn up by the Council Act of 26 July 1995[45];

2. corruption, as defined in Article 4(2) of Directive (EU) 2017/1371 and Article 3 of the Convention on the fight against corruption involving officials of the European Communities or officials of Member States of the European Union, drawn up by the Council Act of 26 May 1997[46], and in Article 2(1) of Council Framework Decision 2003/568/JHA of 22 July 2003 on combating corruption in the private sector[47], as well as corruption as defined in the law of the country where the contracting authority is located, the country in which the person is established or the country of the performance of the contract;

3. conduct related to a criminal organisation referred to in Article 2 of Council Framework Decision 2008/841/JHA of 24 October 2008 on the fight against organised crime[48];

4. money laundering or terrorist financing within the meaning of Article 1(3), (4) and (5) of Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC[49];

5. terrorist offences or offences related to terrorist activities, as defined in Articles 3 to 12 of Directive (EU) 2017/541 of the European Parliament and. of the Council of 15 March 2017 on combating terrorism and replacing Council Framework Decision 2002/475/JHA and amending Council Decision 2005/671/JHA, respectively, or inciting, aiding, abetting or attempting to commit such offences, as referred to in Article 14 of that Directive[50];

6. child labour or other forms of trafficking in human beings as defined in Article 2 of Directive 2011/36/EU of the European Parliament and of the Council of 5 April 2011 on preventing and combating trafficking in human beings and protecting its victims, and replacing Council Framework Decision 2002/629/JHA[51];

5. the person has shown significant deficiencies in complying with main obligations in the performance of a contract financed by the EU, which has led to the early termination of a contract or to the application of liquidated damages or other contractual penalties or which has been discovered following checks, audits or investigations by an authorising officer, OLAF the Court of Auditors or the EPPO;

6. it has been established by a final judgment or final administrative decision that the person has committed an irregularity within the meaning of Article 1(2) of Council Regulation (EC, Euratom) No 2988/95 of 18 December 1995 on the protection of the European Communities financial interests[52];

7. it has been established by a final judgment or final administrative decision that the person or entity has created an entity in a different jurisdiction with the intent to circumvent fiscal, social or any other legal obligations including those related to working rights, employment and labour conditions, in the jurisdiction of its registered office, central administration or principal place of business;

8. it has been established by a final judgment or final administrative decision that an entity has been created with the intent provided for in point (g);

9. the person has intentionally and without proper justification resisted an investigation, check or audit carried out by an authorising officer or its representative or auditor, OLAF, the EPPO, or the Court of Auditors. It shall be considered that the person resists an investigation, check or audit when it carries out actions with the goal or effect of preventing, hindering or delaying the conduct of any of the activities needed to perform the investigation, check or audit. Such actions shall include, in particular, refusing to grant the necessary access to its premises or any other areas used for business purposes, concealing or refusing to disclose information or providing false information.

Point a) does not apply to the purchase of supplies on particularly advantageous terms either from a supplier that is definitively winding up its business activities or from liquidators of an insolvency procedure, an arrangement with creditors, or a similar procedure under EU or national law.

In cases referred to in points c), d), f), g) and h) in the absence of a final judgment or a final administrative decision, or in the case referred to in point e) and i), the contracting authority must exclude a person on the basis of a preliminary classification in law having regard to established facts or other findings contained in the recommendation of the EDES panel. The EDES panel ensures a centralised assessment of those situations after giving the person the opportunity to submit its observations. In indirect management, where applicable according to the correspondent financing or contribution agreement, the contracting authority/entrusted entity will transmit the information to the European Commission and the European Commission may refer the case to the EDES panel.

The contracting authority must exclude the person where:

• a natural or legal person who is member of the administrative, management or supervisory body or has power of representation, decision or control on the person is in a situation listed in points c) to i);

• a natural or legal person that assumes unlimited liability for the debts of that person is in a situation listed in points a) or b);

• a natural or legal person who is essential for the award or for the implementation of the contract and is in a situation referred to in point c) to i).

When a person referred above is excluded, the authorising officer responsible may also exclude or impose a financial penalty on the beneficial owner or any affiliate of the excluded entity. Any decision of the authorising officer responsible or, where applicable, any recommendation of the EDES panel, shall take into consideration whether (i) the excluded person has a functional independence from its affiliate and from the beneficial owner; (ii) the misconduct of the excluded person is not due to a failure to supervise or to maintain adequate controls; (iii) the excluded person has taken a commercial decision without the influence of any affiliate or of the beneficial owner.

The contracting authority must not exclude a person where i) it can demonstrate that adequate measures[53] have been adopted which ensure its reliability, except in the cases listed in point d); ii) it is indispensable for the continuity of the service for a limited duration and pending the adoption of remedial measures; iii) where the exclusion would be disproportionate.

2.4.2.2. Rejection from a given procedure

The contracting authority must reject from a given award procedure a participant who:

1. is in one of the exclusion situations established under Section 2.4.2.1.;

2. has misrepresented the information required by the contracting authority as a condition for participating in the procedure or has failed to supply that information;

3. was previously involved in the preparation of procurement documents used in the award procedure where this entails a breach of the principle of equality of treatment, including distortion of competition that cannot be remedied otherwise;

4. has professional conflicting interests which may negatively affect the performance of the contract in accordance with point 20.6 of Annex I of the FR (only for candidates/tenderers in procurement);

5. is the addressee of a decision prohibiting the award of the contract for having received foreign subsidies distorting the internal market adopted by the Commission in accordance with Article 143(3) of the Financial Regulation (only for candidates/tenderers in procurement) (see Section 2.6.10.2.).

In cases under (a), if the contracting authority becomes aware of a situation of exclusion where a recommendation of the EDES panel is required in accordance with Section 2.4.2.1., it will immediately seize the EDES panel. The evaluation will not be suspended, except in procurement restricted procedures at shortlisting stage (in this case the establishment of the shortlist must be suspended until a decision on the rejection is taken). If the contract is to be awarded to the person concerned by the situation of exclusion, the award of the contract will be suspended until the EDES panel has issued its recommendation. Where necessary, the contracting authority may ask all tenderers to extend the period of validity of the offers accordingly.

If the situation of exclusion is confirmed in the recommendation of the EDES panel, the relevant person must be rejected from the given procedure according to Section 2.4.2.3. and the procedure can resume with an award to another tenderer on the list or, if necessary, cancellation. In parallel, after the recommendation of the EDES panel, a decision of exclusion must be taken according to Section 2.4.2.1.

If the rejection is justified by the fact that the participant is already included at exclusion level in the EDES, the decision of rejection must be taken directly without any contradictory procedure with the participant.

In cases under (b), (c) and (d), before taking the decision to reject a participant from a given procedure, the contracting authority must give the economic operator the opportunity to submit its observations (right to be heard) and to prove, in case of (c) that its involvement in the preparation of documents used in the award procedure does not breach the principle of equal treatment, including distortion of competition. These grounds of rejection may have serious consequences for the economic operator concerned as they may also qualify as grave professional misconduct according to Section 2.4.2.1. and result in a decision of exclusion. In this case, after or in parallel to the decision of rejection, the contracting authority must refer the case to the EDES panel according to Section 2.4.2.1.

In cases under (e), the tenderer is subject of a decision taken by the European Commission (see Section 2.6.10.2.), which prohibits the award of contracts to that tenderer. In the case of such prohibition decision, the contracting authority responsible for an individual award procedure shall notify the rejection from that award procedure by letter addressed to the tenderer concerned, following the prohibition decision.

2.4.2.3. Evidence to be provided

1. Declaration on honour

Participants must sign a declaration together with their application documents, certifying that they do not fall into any of the exclusion or rejection situations cited under Sections 2.4.2.1. and 2.4.2.2. and, where applicable, that they have taken adequate measures to remedy the situation. For calls for proposals, the obligation to fill and sign the declaration on honour (Annex a14b) applies to all applicants, co-applicants and affiliated entities.

They must also declare whether i) natural and legal persons that are members of the administrative, management or supervisory body or that have powers of representation, decision or control and; ii) beneficial owners as referred to in Article 3 of Directive (EU) No. 2015/849[56] are in one of the situations under points c) to h) of Section 2.4.2.1.

Where the candidate or tenderer intends to rely on capacity providing entities or subcontractor(s), he/she must provide the same declaration signed by this/these entity(ies).

The contracting authority must accept the European single procurement document (ESPD)[57] as an alternative to the declaration. The declaration must not be requested when it has already been submitted for the purposes of another award procedure, provided the situation has not changed and that the time elapsed does not exceed one year.

For procurement contracts with a value of EUR 15 000 or less, the contracting authority may waive the requirement to submit a declaration depending on its risk assessment. For grants of EUR 15 000 or less, no declaration on honour must be required. The obligation to submit a declaration on honour does not apply to entities implementing European Union funds in indirect management[58].

2. Documentary evidence

When specifically requested by the contracting authority and where this is necessary to ensure the proper conduct of the procedure, candidates and tenderers, the entity on whose capacity they intend to rely or subcontractors must provide:

1. appropriate evidence that they are not in a situation of exclusion;

2. information on natural or legal persons that are members of its administrative, management or supervisory body or that have powers of representation, decision or control and appropriate evidence that one or several of these persons are not in one of the exclusion situations listed in points c) to h);

3. appropriate evidence that natural or legal persons that assume unlimited liability for the debts of that economic operator is not in a situation listed in points a) or b) of Section 2.4.2.1.

For procurement contracts with a value equal or greater than the international thresholds (services ? EUR 300 000, supply ? EUR 300 000, works ? EUR 5 000 000), the presumed successful tenderer (including consortium members, sub-contractors and capacity providing entities, if any) must supply evidence that they do not fall into the exclusion situations, unless such evidence has already been submitted earlier in the procedure.

In restricted and open procedures, these supporting documents will be requested from tenderers at evaluation stage and verified by the contracting authority before the award of the contract to the potential successful tenderer(s). In addition, the tenderers and candidates must certify that the situation has not altered since the date of issue of the evidence.

The contracting authority must waive the obligation to submit documentary evidence:

1. if it can access it on a national database free of charge; or,

2. if such evidence has already been submitted to it for the purposes of another procedure and provided that any submitted documents are still valid and that the time that has elapsed since the issuing date of the documents does not exceed one year; or,

3. if it recognises that there is a material impossibility to provide such evidence.

The obligation to submit documentary evidence does not apply to entrusted entities.

For grants, no documentary evidence has to be submitted unless specifically requested by the contracting authority.

As satisfactory evidence that the candidate or tenderer is not in one of the situations described in:

• a), c), d), f), g) or h) of Section 2.4.2.1., the contracting authority may accept a recent extract from the judicial record or, failing that, a recent equivalent document issued by a judicial or administrative authority in the country of establishment showing that the requirements are satisfied;

• a) or b) of Section 2.4.2.1., the contracting authority will accept a recent certificate issued by the competent authority of the State concerned. Where the certificate is not issued in the country concerned it may be replaced by a sworn/solemn statement made before a judicial authority or notary or, failing that, a solemn statement made before an administrative authority or a qualified professional body in the country of establishment.

The documents may be originals or copies. However, originals must be made available to the contracting authority upon request. The date of issuing of the documents provided must be no earlier than one year before the date of submission of the tender. If the supporting documents are not written in one of the official languages of the European Union, a translation into the language of the procedure must be attached. Where the documents are in an official language of the European Union other than the one of the procedure, they have to be accepted. However, it is strongly recommended that a translation into the language of the procedure be provided, in order to facilitate the evaluation of the documents.

3. Check of the EDES database

During the evaluation procedure and at the latest before taking the award decision, the contracting authority must check whether any of the entities involved (i.e. candidates or tenderers, including all consortium members, indicated subcontractors and capacity providing entities, grant applicants, including co-applicants and affiliated entities) have been recorded in EDES. Where the contracting authority limits the number of candidates invited to submit a tender, e.g. in a restricted procedure, such checks must be conducted before the candidates are selected. For restricted procedures in calls for proposals, such checks must be conducted once applicants are provisionally selected or placed in a reserve list, during the final eligibility checks before the award of the contract.

2.4.2.4. Consequences of an exclusion/rejection situation in an award procedure

When the contracting authority takes the decision to reject a candidate/tenderer or applicant from an award procedure because it is in an exclusion situation established according to Section 2.4.2.1. or because it is in another situation of rejection (Section 2.4.2.2., points b) and e)), it must notify it to the person. Depending on the reason of rejection, the notification will specify that the request to participate/tender/application is unsuitable (for the situations under Section 2.4.2.2., point a)) or irregular (for the situations under Section 2.4.2.2., points b) and e)).

If a subcontractor or an entity on whose capacity the candidate or tenderer intends to rely is in an exclusion situation, the contracting authority must require their replacement.

2.4.3. Rule of law conditionality

Regulation (EU, Euratom) 2020/2092[59](‘Conditionality Regulation’) establishes rules for the protection of the Union budget, in the case of breaches of the principles of the rule of law in a Member State.

The Conditionality Regulation starts from the premise that breaches of the principles of the rule of law, in particular those that affect the proper functioning of public authorities and effective judicial review, can seriously harm the financial interests of the Union. This is even more so for breaches that are widespread or due to recurrent practices or omissions by public authorities, or to general measures adopted by such authorities.

In the event of breaches of the principles of the rule of law, the Conditionality Regulation determines the measures to be adopted, and the procedure to be followed to adopt such measures. Measures under the Conditionality Regulation are necessary in particular in cases where other procedures set out in Union legislation would not allow the Union budget to be protected more effectively.

The possible measures under the Conditionality Regulation include the suspension of payments and of commitments, the suspension of the disbursement of instalments or the early repayment of loans, a reduction of funding under existing commitments, and a prohibition on entering into new commitments with recipients or to enter into new agreements on loans or other instruments guaranteed by the Union budget.

In the Communication[60] which accompanied the Conditionality Regulation, the Commission provided non-binding Guidelines on (i) the conditions for the adoption of measures; (ii) the relation between the Conditionality Regulation and other instruments; (iii) the proportionality of the measures to be proposed to the Council; (iv) the procedure and assessment process; and (v) the protection of the rights of final recipients or beneficiaries.

As regards ongoing contracts the European Commission is entitled, in application of the measures taken by the Council, to suspend time-limits of payments, the implementation of a project, or termination of a contract. Contractors and grant beneficiaries shall take similar measures as regards subcontractors or recipients of financial support. Contractor and grant beneficiaries may also have to not enter into legal commitments with concerned entities by a Council decision.

2.5. General principles applying to procurement and grants

2.5.1. Procurement

The following principles should be followed[65]:

Transparency

The contracting authority should ensure openness and clarity on procurement policy and its delivery. This obligation consists in ensuring, for the benefit of any potential tenderer, a degree of advertising sufficient to enable the market to be opened up to competition and the impartiality of procurement procedures to be reviewed[66]. Transparency is also ensured through the publication of award notices in the cases referred to in Section 2.10.4.1. as well as information about recipients (see Section 2.10.4.2.).

Equal treatment and non-discrimination

All interested parties should be treated in the same way, meaning that all tenderers must be afforded equal opportunities when formulating their tenders, which therefore implies that the tenders of all competitors must be subject to the same conditions[67].

Competition

Procurement should be carried out by competition, unless there are justified reasons to the contrary. This obligation also means that the estimated value of a contract may not be established in such a way as to avoid the competitive tendering procedure or to circumvent the rules which apply to certain procurement procedures or above a certain threshold, nor may a contract be split for that purpose (a practice known as ‘salami-slicing’). Moreover, as pointed out by the Court[68], the widest possible opening-up to competition is also in the interest of the contracting authority itself, which will have thus greater choice as to the tender that is the most advantageous and the most suited to the needs of the public authority.

2.5.2. Grants

The following principles should be followed[69]:

Equal treatment

No preferential treatment may be given to any potential beneficiary. This rule applies not only to the process of identifying and selecting beneficiaries[70] but also during the implementation of the action.

Transparency

The contracting authority must publish all relevant information in order to enable the potential beneficiaries to obtain timely and accurate information on the actions being undertaken by the European Union. The financing decision/action plan is implemented by publishing calls for proposals[71]. In addition, transparency is also ensured through the publication of information about recipients (see Section 2.4.10.2.).

Co-financing

The costs are shared between the contracting authority and the beneficiary. This means that a grant awarded for an action cannot fund the entire cost of the action and that an operating grant cannot fund all the operating costs incurred by the beneficiary. For more details on the exceptions to the co-financing principle, see Section 6.2.8.

Non-cumulative award and no double funding

Each beneficiary may not get more than one grant per action (unless otherwise provided in the applicable basic act), neither more than one operating grant for a given financial year. Under the direct management mode, however, an action may be financed jointly from separate budget lines by a number of authorising officers. The applicant must specify in the application form any applications and awarded grants relating to the same action or to the same work programme.

Same costs cannot be financed twice by the contracting authority.

Non-retroactivity

Grants cannot finance actions that have already been completed and which have therefore proved achievable without financial support from the European Union. At the same time, the rule prohibits awarding an operating grant for activities carried out in previous budgetary years of the beneficiary. For more details on the non?retroactivity principle and crisis situations, see Section 6.2.7.

No-profit

Grants must not have the purpose or effect of producing a profit within the framework of the action or the work programme of the beneficiary. For more details, see Section 6.2.9.

2.5.3. Visibility

Unless the European Commission requests or agrees otherwise, all recipients must acknowledge the support received under EU programmes and contribute to the visibility of the European Union.

For this purpose, recipients must use the EU emblem and short funding statements. The European Commission has elaborated a guidance outlining what is expected of recipients[72]. Such measures shall be carried out in accordance with the latest Communication and Visibility Requirements for EU-funded external action, published by the European Commission[73] or with any other guidelines agreed between the European Commission and the recipient.

2.5.4. Conflict of interests

The term ‘conflict of interests[74]’ is used with different meanings in different contexts. Four cases can be distinguished:

1. conflict of interest for the contracting authority;

2. grave professional misconduct;

3. involvement in the preparation of documents used in an award procedure;

4. professional conflicting interests;

5. conflict of interest for the contractor or grant beneficiary: Please refer to Section 2.5.6.

2.5.4.1. Conflict of interest for the contracting authority

A conflict of interest[75] exists where the impartial and objective exercise of the functions of authorising officer (or any financial actor, including national authorities at any level, involved in budget implementation under direct, indirect and shared management) is compromised for reasons involving family, emotional life, political or national affinity, economic interest or any other direct or indirect personal interest.

Acts likely to be affected by a conflict of interest may, inter alia, take one of the following forms:

1. granting oneself or others unjustified direct or indirect advantages;

2. refusing to a participant or contractor the rights or advantages to which that person or entity is entitled;

3. committing undue or wrongful acts or failing to carry out acts that are mandatory.

2.5.4.2. Grave professional misconduct

A grave professional misconduct refers to all wrongful conduct that denotes a wrongful intent or gross negligence.

It encompasses the violation of applicable laws or regulations or ethical standards of the profession to which the participant or contractor belongs, and any wrongful conduct that has an impact on the professional credibility of the participant or contractor[78] (for details, see Section 2.5.6.).

There are specific situations for participants or recipients that qualify as ‘grave professional misconduct’ and not as conflict of interests[79]:

• where the participant or recipient attempts to unduly influence the decision-making of the contracting authority during an award procedure;

• where the participant enters into agreement with other persons or entities in order to distort competition;

• where the participant tries to obtain confidential information that may give it undue advantages in the procedure.

2.5.4.3. Involvement in the preparation of documents used in an award procedure and distortion of competition

There are cases where the contracting authority uses a technical assistance contract to help drafting procurement documents (like tender specifications), or documents for a grant award procedure, of a subsequent award procedure. In this case, it is the responsibility of the contracting authority to ensure equality of treatment between the operator involved in the technical assistance and other participants. The contractor can be rejected from the subsequent procedure when the contractor, its personnel or subcontractors were involved in the preparation of procurement documents or documents relating to a grant award procedure and this entails a breach of the principle of equality of treatment, including a distortion of competition that cannot be remedied otherwise[80]. On this regard, please note the existence of a declaration of objectivity and confidentiality (Annex a3) that should be completed by all persons involved in preparing terms of reference, technical specifications or other documents relating to an award procedure.

2.5.4.4. Professional conflicting interest (procurement only)

A professional conflicting interest arises where the previous or ongoing professional activities of an economic operator affects or risks affecting its capacity to perform a procurement contract in an independent, impartial and objective manner[81].

Examples of such situations are cases where an economic operator could be awarded a contract

• to evaluate a project in which the economic operator has participated or has vested interests;

• to audit accounts that the economic operator has previously certified;

• to evaluate a programme under which the economic operator has previously received subsidies;

• to conduct a study providing input to a Union policy regulating a sector where the economic operator has its business interests;

Such cases tend to arise in evaluation or audit framework contracts, where the contractor might have a professional conflicting interest for a specific contract.

This is treated at the selection stage, under the professional capacity criteria. The contracting authority shall require economic operators, and, where appropriate, entities on whose capacity the economic operator intends to rely, as well as envisaged subcontractors to sign a declaration on honour confirming the absence of professional conflicting interests, and, at the request of the contracting authority, when needed to provide any relevant information.

The contracting authority shall assess the existence of professional conflicting interests on the basis of a declaration of professional conflicting interests and, where relevant, the information provided in response to contracting authority’s request for additional information.

Where the contracting authority has established that a candidate/tenderer is in a situation of professional conflicting interest, the latter shall be rejected.

A case-by-case assessment is required to confirm that the situation of professional conflicting interest may negatively affect the performance on the contract in question. The professional conflicting interest does not necessarily have to exist at the time the contracting authority takes its decision to award the contract, but an actual risk of conflicting interest already present at this stage is sufficient to reject a participant. However, the mere possibility of a professional conflicting interest cannot be a ground for rejection and the conflict has to be evidenced and not hypothetical[82]. Please also refer to Section 2.4.2.2.

For the award of a multiple framework contract, the existence of professional conflicting interests has to be established vis-à-vis the majority of potential assignments to be performed under the framework contract. If such a conclusion cannot be reached before the award of the multiple framework contract, the contracting authority may not exclude the tenderer/candidate at this stage and should offer them an opportunity to provide for acceptable solutions to mitigate or avoid such professional conflicting interest. Checks for the possible presence of professional conflicting interests should be carried out again, on a case-by case basis, before the award of each specific contract and if necessary, during the performance of the contract.

A professional conflicting interest might occur with regard to on-going contracts (e.g. the contractor is acquired by another economic operator), the contractor must immediately inform the contracting authority and measures must be adopted to prevent or to resolve such a conflict, including terminating the contract if necessary.

2.5.5. Other essential points

Exceptional changes to the composition of the consortium during the award procedure (procurement)

To ensure fair competition, no changes to the identity or composition of the candidate/tenderer are permitted, except in the situations listed below subject to the contracting authority’s prior authorisation in writing.

The only cases where a change in composition of a consortium may be accepted are:

1. where there is a merger or takeover of one member of the consortium (universal succession);

2. where the change comes from the contracting authority, i.e. one member (leader or other member) of the consortium is subject to exclusion or rejection because it does not comply with a selection criterion applicable to it. Indeed, in this case, exclusion or rejection applies to a legal entity, not to a group, so it may be disproportionate to reject the whole request to participate/tender on that basis; such situations should be appreciated on a case-by-case basis. The position to adopt could be different according to the various exclusion cases (for instance, a change could be accepted in case of bankruptcy, but not in the case where the member of the group has been convicted of fraud, corruption, etc.). In case of rejection, withdrawal of the rejected member of the group could be accepted if the selection criterion is still fulfilled without it.

The fact that the entity excluded is the leader of the consortium does not affect the substance of the changes to the consortium. A leader has powers of attorney to represent other members of the group of economic operators, but this does not determine per se its relative weight in the consortium. What has to be considered is the incidence that the entity concerned has in the selection criteria and in the award criteria.

The contracting authority must verify the following conditions:

1. in the case (i) above, whether the new entity meets eligibility requirements;

2. in the case (i) above, whether the new entity is not in an exclusion situation and is not subject to restrictive measures;

3. in both cases, whether the selection criteria are still fulfilled (without the excluded or rejected entity if applicable and without replacing it) compared to the request to participate/tender originally submitted;

4. in both cases, whether the change in composition of the consortium does not entail any substantial change in the tender as originally submitted. For the case (ii), this condition is met as long as:

1. all the tasks assigned to the concerned or excluded entity are taken over: (1) by the newly composed consortium (for case (i) above); (2) by the other members of the consortium (for case (ii) above);

2. the change does not make the tender non-compliant with the requirements set in tender documents;

3. the change does not modify the evaluation of award criteria as originally submitted.

If all the conditions are fulfilled, the contracting authority can accept the change in the composition of the consortium. Otherwise, the request to participate/tender must be rejected.

As regards changes in consortium composition after contract signature please refer to Section 2.11.2.

Requesting information only once[83]

Information already available at European Union institutions, the management authorities and other bodies and entities implementing the European Union budget, must be used to the extent possible to avoid asking persons and entities receiving European Union funds for the same information more than once.

Verification of financial guarantees

Financial guarantees have the effect of making the third party stand as irrevocable collateral security, or first-call guarantor of the defaulting contractor's or grant beneficiary's obligations. At the contracting authority's request, the third party will therefore automatically replace the contractor or grant beneficiary if the latter fails to fulfil its obligations towards the contracting authority, up to the amount for which the financial guarantee has been given. A thorough check on the legality, reliability and authenticity of any financial guarantees is therefore essential[84].

In indirect management, the contracting authority should seek guidance from the European Commission before accepting a financial guarantee.

Record keeping

(i) Record keeping obligations for the contracting authority in direct Management:

Subject to the contracting authority’s legislation on access to documents, written records of the entire procurement and grant award procedure must be kept confidential and kept by the contracting authority in accordance with the policy adopted on archiving[85].

Unsuccessful proposals have to be kept for 5 years from the closure of the call for proposal, and unsuccessful tenders have to be kept for 5 years from the closure of the call for tenders.

Contractual and financial documents have to be kept for a minimum of 10 years from closure of the contract and up to the time limitation period (prescription date) of any dispute about the law governing the contract. During and after this period, the contracting authority will treat personal data in conformity with its privacy policy. The documents to be conserved include all the preparatory documents, the corresponding financing agreement, the originals of all requests to participate/tenders/proposals submitted, and any related correspondence.

Financial guarantees (originals) must be kept in a safe place where they are protected against the risk of loss or theft up to the end of their validity period or the end of the contractual obligations.

(ii) Record keeping obligations for the contracting authority in indirect management:

The contracting authority shall keep all relevant financial and contractual supporting documents from the date of the entry into force of the financing agreement or as from an earlier date which is stipulated as the start date of the period of execution for 5 years as from the end of the execution period. The financing agreement defines the retention period of the files. If its law conflicts with the confidentiality required, the contracting authority must obtain prior authorisation from the European Commission before disclosing any information.

(iii) Recipients of funds[86]:

Any recipient (contractor or grant beneficiary) shall keep records and supporting documents, including statistical records and other records pertaining to the funding, as well as records and documents in electronic format, for 5 years following the payment of the balance or, in absence of such payment, the transaction. This period shall be 3 years where the funding is of an amount lower than or equal to EUR 60 000.

Records and documents pertaining to audits, appeals, litigation, the pursuit of claims relating to legal commitments or pertaining to OLAF investigations shall be retained until such audits, appeals, litigation, pursuit of claims or investigations have been closed.

The documentation referred to above must be made available for inspection by the European Commission, OLAF, the European Public Prosecutor’s Office (EPPO) and the Court of Auditors.

Cross-cutting issues

Environmental, climate change, gender equality, accessibility for disabled people concerns need to be taken into account by participants in award procedures. Furthermore, appropriate environmental screening, including for climate change and biodiversity impacts, must be undertaken at project level, in accordance with the applicable legislative acts of the European Union, for both procurements and grants. Where relevant, strategic environmental assessments must be used in the implementation of sectoral programmes.

Joint procurement

In case of joint action between an EU institution and one or more contracting authorities from a Member State, from an EFTA State or from an EU candidate country (if that possibility has been specifically provided for in bilateral or multilateral treaty), or with other third countries (if such possibility is specifically provided for in the applicable basic act), the procurement procedure may be carried out jointly by the EU institution and that contracting authority. In this case, the procedures applicable to the European Union Institutions must apply[87]. Where the share pertaining to or managed by the contracting authority of a Member State in the total estimated value of the contract is equal to or above 50 %, or in other duly justified cases, the EU institution may decide that the procedural rules applicable to the contracting authority of a Member State shall apply to the joint procurement, provided that those rules may be considered as equivalent to those of the EU institution.

Per diem

Per diem is a maximum fixed flat rate, covering daily subsistence costs for missions provided for in the terms of reference or the budget of the action, and if required approved by the contracting authority. Per diem include accommodation, meals, local travel within the place of mission and sundry expenses. Any subsistence allowances to be paid for missions undertaken must not exceed published per diem rates[88].

The applicable per diem rate is the per diem rate in force at the time of contract signature and will not be subject to revision.

In case of service contracts, missions are assignments carried out by the contractor’s authorised experts away from the expert's place of performance or the home-based location.

Therefore, to define a mission, the contracting authority must indicate in the terms of reference the delivery mode of the expert’s assignment:

• On the place of performance: when the contracting authority requests the expert to implement the contract in a defined location. The place of performance must be a city and cannot be a region or a country.

• Home-based: when the contracting authority does not require the expert to implement the assignment in any specific location. In case the assignment requires missions, the contractor must indicate in its offer the home-based location to calculate the mission costs.

An expert may, for the same assignment, work under the two different delivery modes having working days “on the place of performance” and working days “home-based.” The place of performance can be the same for the complete team of experts or each expert can have one different place of performance. However, each expert may have maximum one location “on the place of performance” in addition to the “home-based” location (if any).

The contracting authority must identify in the terms of reference, the location(s) where the expert will undertake mission(s) and the working days needed for each mission.

Local travel to and from the airport is therefore covered by the per diem. Travelling time for the purpose of a mission is to be regarded as part of the mission. The contracting authority reserves the right to reject payment of per diem for time spent travelling if the most direct route and the most economical fare criteria have not been applied. Travel undertaken by the expert for mobilisation and demobilisation as well as for leave purposes shall not be considered a mission and will not be subject to payment of per diem.

Per diem are payable on the basis of the number of hours spent on the mission. Per diem may only be paid in full or in half (no other fractions are possible):

• A full per diem shall be paid for each 24-hour period spent on mission.

• Half of a per diem shall be paid in case of a period of at least 12 hours but less than 24 hours spent on mission.

• No per diem shall be paid for missions of less than 12 hours.

In case of grant contracts, beneficiaries should reimburse per diems according to the rules and regulations of the grant beneficiaries, without exceeding the per diem rates published by the European Commission at the time of contract signature. Any person taking part in the action are eligible for the reimbursement of per diems, including staff of the beneficiaries, associates, affiliated entities and the final beneficiary(ies).

Contingency reserve (grants)

A reserve for contingencies and/or possible fluctuations in exchange rates not exceeding 5% of the direct eligible costs (for actions, or part of an action, where the grant takes the form of reimbursement of costs) may be included by the applicants in the budget for external actions given the specificity and the higher level of unpredictability of external actions.

2.5.6. Ethics and values

All types of contracts (procurement and grants) include a code of conduct laying down ethical clauses. Respecting this code of conduct is considered as a contractual obligation.

Any mention of the contractor in the present section has to be understood as the beneficiary in case of a grant contract. The contractual obligations referred to in the present section must also apply to all members of a consortium, to any sub-contractors and capacity providing entities, to lead applicants, co-applicants, associates and affiliated entities.

The contractor as impartial and faithful adviser - absence of conflict of interest: the contractor must at all time act impartially and as a faithful adviser in accordance with the code of conduct of its profession. It must refrain from making public statements about the project or services without the contracting authority’s prior authorisation. It may not commit the contracting authority in any way without its prior written consent. The contractor must refrain from any relationship likely to give rise to a conflict of interest compromising its independence or that of its personnel. If the contractor ceases to be independent, the contracting authority may terminate the contract with immediate effect.

The contractor must respect environmental legislation and core labour standards: participants who have been awarded contracts must comply with the environmental legislation including multilateral environmental agreements, and with the core labour standards as applicable and as defined in the relevant International Labour Organisation conventions (such as the conventions on freedom of association and collective bargaining; elimination of forced and compulsory labour; abolition of child labour).

The contractor must commit to and ensure the respect of basic EU values: the contractor and its -personnel must comply with basic EU values such as respect for human dignity, freedom, democracy, equality, the rule of law and human rights, including the rights of minorities.

The contractor and payments: the contractor may not accept any payment connected with the contract other than that provided for therein. The contractor and its personnel must not exercise any activity or receive any advantage inconsistent with their obligations to the contracting authority.

The contractor and professional secrecy: the contractor and its personnel are bound to maintain professional secrecy for the entire duration of the contract and after its completion. All reports and documents drawn up or received by the contractor during the performance of the contract are confidential.

The contractor and anti-corruption and anti-bribery: the contractor must comply with all applicable laws and regulations and codes relating to anti-bribery and anti-corruption.

The European Commission reserves the right to suspend or terminate the contract, if corrupt practices of any kind are discovered at any stage of the award process or implementation of the contract and if the contractor fails to take all appropriate measures to remedy the situation.

For the purposes of this provision, ‘corrupt practices’ are the offer of a bribe, gift, gratuity or commission to any person as an inducement or reward for performing or refraining from any act relating to the award of a contract or implementation of a contract already concluded with the contracting authority.

Corrupt practices may also include unusual commercial expenses that are not mentioned in the contract or not stemming from a properly concluded contract referring to the contract, commissions not paid in return for any actual and legitimate service, commissions remitted to a tax haven, commissions paid to a recipient who is not clearly identified or commission paid to a company that looks like a front company. Contractors found to have paid unusual commercial expenses on projects funded by the EU are liable, depending on the seriousness of the facts noted, to have their contracts terminated or to be excluded from receiving EU funds.

The European Commission may carry out any documentary or on-the-spot checks it deems necessary to find evidence in cases of suspected unusual commercial expenses.

2.5.7. Anti-fraud strategy

The European Commission is committed to fight and mitigate fraud, corruption or other illegal activity affecting the financial interests of the European Union. In this context, the development of an anti-fraud culture among all the stakeholders is of great importance.

The European Commission’s current anti-fraud strategy (CAFS) was adopted in 2019. It is an internal policy document binding on the Commission services and executive agencies in their fight against fraud and corruption affecting the EU's financial interests.

 The CAFS were updated to enhance the protection of the EU budget, to strengthen the corporate oversight of the European Commission regarding all issues related to fraud and to reinforce the overall anti-fraud system. In 2023, the Commission adopted a new action plan to the CAFS, to promote the use of IT solutions to support the fight against fraud and interoperability of databases used by the Commission and Member States, as well as the strengthening of the culture of ethics and anti-fraud for all Commission staff. In the external action area, the action plan provides for reinforced protection of funds under indirect management.

In line with the requirements of the CAFS, DG INTPA has an anti-fraud strategy (AFS)[89] and a related action plan to enhance the prevention, detection and correction of fraud.

An important factor in combatting fraud is staff awareness and an effective system of reporting indications of fraud and irregularities. While whistleblowing is a right in many legal systems, it is an obligation for EU staff. The EU Staff Regulations[90] and the Financial Regulation[91] set out an obligation to report serious irregularities for any EU official who becomes aware of:

• facts that give rise to a presumption of possible illegal activity, including fraud or corruption, detrimental to the interests of the EU;

• conduct relating to the discharge of professional duties that may constitute a serious failure to comply with the obligations of EU officials.

While fraud prevention and detection is primarily the responsibility of each head of a Commission service (as appropriate in each management mode), two complementary bodies reinforce the protection of EU’s financial interests in a comprehensive way:

• The European Anti-Fraud Office, commonly known as OLAF, in charge of administrative investigations;

• The European Public Prosecutor’s Office, the EPPO, change of criminal investigations and prosecutions within the participating EU member states.

OLAF investigates fraud against the EU budget, corruption and serious misconduct within the EU, and develops anti-fraud policy for the Commission. OLAF must be informed of suspicions of fraud, corruption or other irregularities concerning EU funds[92], and is entitled to conduct:

• external investigations relating to expenditure and revenue under the EU budget/EDF;

• internal administrative investigations concerning staff of the EU institutions.

OLAF makes its investigations independently and in compliance with the cooperation agreements in force in third countries. It cooperates actively with its partners in the EU Member States and third countries.

Following its investigation, OLAF makes a report indicating its findings and recommendations. The competent responsible authorising officer must ensure the financial or administrative follow-up (the recovery of amounts unduly paid and/or registration of the person in EDES) in cooperation with OLAF.

The EPPO is EU’s supranational prosecutorial body with the powers to carry out independently investigations and prosecutions into crimes affecting the financial interests of the EU. The focus of its mandate is fraud and other crimes affecting the EU’s financial interest as defined under Directive 2017/1371[93]. The EPPO can prosecute and bring the suspected perpetrators of such crimes to judgment in the 23 participating Member States[94]. Under specific conditions, the EPPO is also competent to investigate, prosecute and bring to judgment perpetrators of criminal offences related to EU funds allocated to third countries[95].

2.5.8. Consequences of fraud and irregularities in an award procedure

Where the award procedure has been subject to irregularities or fraud, the authorising officer responsible must suspend the procedure and may take any necessary measures, including the cancellation of the procedure. The authorising officer responsible must inform the OLAF immediately of suspected cases of fraud[96].

Where, after the award, the award procedure proves to have been subject to irregularities or fraud, the authorising officer responsible may:

1. refuse to sign the legal commitment;

2. suspend payments;

3. suspend the implementation of the legal commitment;

4. where appropriate, terminate the legal commitment in whole or with regard to one or more recipients[97].

2.5.9. Procedure with a suspensive clause

Award procedures (including negotiated/direct award) may be launched with a suspensive clause in any of the three following cases:

1. in duly exceptional cases, before a financing decision/action plan is adopted;

2. in duly exceptional cases, after adoption of the financing decision/action plan, but before a financing agreement between the European Commission and the partner country enters into force;

   Suspensive clauses are very exceptional because the Financial Regulation generally requires the adoption of a financing decision by the European Commission (or, where relevant, the entry into force of a financing agreement) before a call for tenders or proposals is launched. However, exceptional circumstances may arise that give grounds for departing from the usual decision-making process. As a rule, circumstances justifying the use of a suspensive clause shall be outside the European Commission’s control. Note that: the use of the suspensive clause after the financing decision is adopted but before the financing agreement enters into force may be considered in most cases as being outside the European Commission’s control, as the entry into force of such agreement depends on the will of a third party (i.e. the partner country); the use of the suspensive clause before a financing decision is adopted requires good reasons why there are objective circumstances leading to the use of such clause and it is impossible to wait for the decision to be adopted. These reasons must be duly reflected in the request for prior approval.

3. where the financing decision/action plan has been adopted, but the appropriations are not yet available, like in the case of multi-annual financing decisions/action plans (appropriations for year N are available, but not for subsequent years). In such a case, and for efficiency purposes, an award procedure is launched covering two or more budgetary years, also for years for which appropriations are not yet available.

For the procedures with a suspensive clause, a prior approval is required.

Because of its implications, the contract notice, the guidelines for grant applicants, invitation to negotiate/direct award must explicitly state that there is a suspensive clause.

Under any of the three scenarios above, the actual award and the signature of a contract following an award procedure (including negotiated procedures or direct awards) cannot take place until:

1. the financing decision/action plan is adopted;

2. the financing agreement enters into force;

3. the appropriations are available.

The procedure will be cancelled if the European Commission’s decision-making procedure is not completed, the financing agreement does not enter into force, or the appropriations are not made available.

2.6. Procurement procedures

The basic means of awarding contracts is competitive tendering. The purpose is twofold:

• to ensure that operations comply with the awarding principles; and

• to obtain the quality of services, supplies or works wanted, at the best possible price.

There are several different procurement procedures, each allowing a different degree of competition.

Article 167 FR provides the following list of procedures for awarding public contracts, including framework contracts or concession contracts[98]:

1. open procedure;

2. restricted procedure, including through a dynamic purchasing system;

3. design contest;

4. negotiated procedure, including without prior publication;

5. competitive dialogue;

6. competitive procedure with negotiation;

7. innovation partnership;

8. procedures involving a call for expression of interest.

Article 181 FR on external action procurement provides on the one hand that the common provisions on public procurement must be applicable to the external action procurement, subject to special provisions relating to the arrangements for awarding external contracts laid down in its Annex I.

On the other hand, it also adds further conditions to the use of certain common provisions. Accordingly, the publicity measures of Article 166(1) FR and the obligation to respect a standstill period must only apply as from:

1. EUR 300 000 for service and supply contracts;

2. EUR 5 000 000 for works contracts.

In addition to the above-mentioned types of procurement procedures, point 39 of Annex I to the FR further indicates that procurement procedures in the field of external actions must be as follows:

1. the restricted procedure as provided for in Article 167(1)(b);

2. the open procedure as provided for in Article 167(1)(a);

3. the local open procedure; and

4. the simplified procedure[99].

Note also that for services, supply and works contracts both open and restricted procedures can be used. However, only templates for the restricted procedure for services, and templates for the open procedure for supplies and works are available as annexes to the practical guide.

2.6.1. Which procurement procedure to apply?

The applicable standard procedures further explained in this practical guide are summarised in the table below. They are divided between those for services (e.g. technical assistance and studies), supplies (i.e. equipment and materials) and works (i.e. infrastructure and other engineering works). Once the European Commission has approved an action by adopting a financing decision/action plan and, where appropriate, a financing agreement, the contracting authority can proceed with tendering and contracting following these standard procedures. The thresholds given in the table are based on the maximum budget for the contract in question (including any co-financing).

The contracting authority shall estimate, based on the total amount payable, the value of a contract in view of determining the procurement procedure[100]. This estimate shall be made at the latest when the contracting authority launches the procurement procedure. The contracting authority must estimate the value of a purchase on the basis of previous experience, previous similar contracts and/or on the basis of a preliminary market research. Where contracts are subdivided into lots, the value of each lot is taken into account when calculating the overall threshold.

The estimated value of a contract may not be established in such a way as to avoid the competitive tendering procedure or to circumvent the rules which apply to certain procurement procedures or above a certain threshold (see Section 2.5.1.). Nor may a contract be split for that purpose.

If there are doubts concerning the estimated value of the contract or if the value is close to a threshold, it is advised to use a procedure for a higher level.

To the extent possible and for the purpose of simplification of the financial administration, small contracts should be avoided. Therefore, it should be avoided to split programmes unnecessarily into a series of small contracts.

For mixed contracts[101], covering a combination of works, supplies or services, the contracting authority determines the procurement thresholds and procedure to be used (with the agreement of the European Commission, for indirect management with ex ante controls). The estimated value of the particular parts of the contract should be taken into the account and the following rules apply:

• contracts which combine supplies and services are classified on the basis of which of the two accounts for the greater estimated value;

• if the contract combines works and services, it should be awarded according to its main subject: if services are minor, the works threshold will apply; if the works are minor, the service threshold will apply.

Regardless of the procedure used, all basic principles must be complied with (including the eligibility, exclusion and selection criteria).

Where possible and appropriate in light of the nature of the action, and in line with the financing agreement if any, the use of the simplest procedures must be favoured.

Other procedures can be applied regardless of the thresholds, for instance negotiated procedures on the basis of a single tender — as long as the relevant conditions are met (see Sections 2.6.5., 2.6.6., 2.6.7. and 2.6.8.).

Multiple sourcing[102]

Multiple sourcing procurement may be used for supplies and services. It may be used only where it is necessary to avoid the over-reliance on a single provider for critical supplies or services, or where it is necessary to have identical or quasi-identical services performed in parallel by different contractors.

When multiple sourcing procurement is used, contracts shall be awarded within the same procedure. The total value of all foreseen contracts with identical or quasi-identical subject matter shall be taken into account for the overall evaluation pursuant to the applicable threshold.

Where the total value of all the contracts to be awarded is equal to or greater than EUR 300 000, the publicity measures shall apply to each of the contracts.

The contracting authority shall indicate in the procurement documents the maximum number of contracts to be awarded. Contracts resulting from a multiple sourcing procurement shall be awarded by order of ranking laid down in the evaluation committee report, and shall also be signed in that order unless there are duly justified reasons.

2.6.2. Open procedure

In ‘open’ calls for tenders (international or local), all economic operators may submit a tender. The contract is given maximum publicity by publishing a notice in the Official Journal of the European Union, the Official Journal of the partner country, the F&T Portal, and in any other appropriate media.

See guidelines for publication (Annex a11e).

The tenders are examined, the eligibility and the financial, economic, technical and professional capacity of the tenderers are checked to arrive at a selection, the tenders are evaluated and the contract is awarded (see Sections 2.6.11.). No negotiation is allowed.

2.6.3. Restricted procedure[103]

In ‘restricted’ calls for tenders, all economic operators may submit a request to participate but only those who satisfy the selection and exclusion criteria may be invited to submit a tender.

The contract is given maximum publicity by publishing a notice in the Official Journal of the European Union, in the Official Journal of the partner country, on the F&T Portal, and in any other appropriate media.

See guidelines for publication (Annex a11e).

The selection criteria and the tasks to be undertaken are described in the published additional information about the contract notice (A5f) document. A ‘long list’ of all the candidates replying to the notice is cut down to a shortlist of the best qualified, on the basis of their requests to participate. At the shortlisting stage, before the list is approved, the contracting authority checks that none of the candidates (including each member of a consortium) is in an exclusion situation in the early detection and exclusion system (see Section 2.4.2.) or detection in the list of EU restrictive measures (see Section 2.4.1.).

The contracting authority sends the tender dossier only to the short-listed candidates.

Once the tenders have been analysed, they are evaluated and the successful tenderer is chosen (see Section 2.6.11.). No negotiation is allowed.

2.6.4. Simplified procedure[104]

Under the simplified procedure, the contracting authority invites at least three candidates of its choice to submit tenders without publishing the contract notice.

The contracting authority draws up a list of at least three economic operators with a justification for its choice. Before selecting them, the contracting authority checks that none is in an exclusion situation in the early detection and exclusion system (see Section 2.4.2.) or listed in EU restrictive measures (see Section 2.4.1.).

The candidates are sent a letter of invitation to tender accompanied by a tender dossier. The contract notice is not published, but it is included in the tender dossier as it contains important information for those companies that are invited to tender.

Tenders must be sent to the contracting authority no later than the deadline set in the invitation to tender. The chosen candidates must be allowed at least 30 days from the dispatch of the letter of invitation to tender. Experience shows that too short a period prevents candidates from tendering or causes them to submit incomplete or ill-prepared tenders. Therefore, this deadline cannot be shortened. The deadline for submissions must fall on a working day in the country of the contracting authority.

The tenders are opened and evaluated by an evaluation committee with the necessary technical and administrative expertise, appointed by the contracting authority.

For paper submission , it is advised to organise the tender-opening session one week after the deadline for submission to allow tenders sent on the last day to arrive at the contracting authority premises.

The standstill period does not apply and no award notice is to be published.

If, following consultation of the tenderers, the contracting authority receives only one tender that is administratively and technically valid, the contract may be awarded provided that the award criteria are met. In the event of one failure of the simplified procedure, the contract may be awarded by negotiated procedure (see Section 2.6.8.).

For further details regarding simplified procedure in services, see Section 3.5.2., for supplies see Section 4.5. and for works Section 5.6.

2.6.5. Framework contracts[105]

A framework contract is not a procurement procedure. A framework contract is an agreement between one or more contracting authorities and one or more economic operators, the purpose of which is to establish the terms governing specific contracts which may be awarded during a given period, in particular with regard to price and, where appropriate, the quantity envisaged[106]:

• The framework contract stipulates the subject matter of the purchase, the price list, the parties, the legal setup, the duration and the method of making particular purchases.

• The specific contract defines at a later stage the other necessary elements of the contractual relationship (e.g. number of days and profile of key expert; terms of reference for a report to be drafted). Specificcontracts can only be concluded between the contracting authorities and the economic operators originally party to the framework contract.

In this way, the framework contract represents a structure within which subsequent specific contracts are concluded. Framework contracts create no direct obligation for the contracting authority. Only the specific contracts within a framework contract create a direct obligation for the specific contracting authority. Therefore, only the specific contracts concluded under a framework contract must be preceded by a budgetary commitment.

A framework contract is a useful tool for the repetitive acquisition of services or supplies when the contracting authority can define the subject matter of the procurement, but does not know when and what quantity it will need during a certain period of time. When managed properly, a framework contract can deliver many benefits, such as: reduced prices (economy of scale), lower tendering costs, rapid response to particular needs.

Within the European Commission, four types of framework contracts are used:

• Single framework contract: a framework contract concluded with a single economic operator to whom specific contracts or order forms are awarded. Order forms are a simplified form of specific contract used, whatever the value, when only the quantity ordered and place of delivery needs to be indicated.

• Multiple framework contract in cascade: the contracting authority ranks the tenderers in descending order according to the outcome of the evaluation of the submitted offers. This ranking is done with a view to establish the list of framework contractors and the sequence in which they will be offered orders. The specific contracting authority always contacts the contractor at the top of the list. If that contractor is unavailable or incapable to respond for reasons which do not entail terminating the contract, the second contractor may be contacted, and then, if necessary and under the same conditions, the third, and so on and so forth.

• Multiple framework contract with reopening of competition: the contracting authority concludes contracts on identical terms with several framework contractors. The minimum number of framework contractors is three and it is strongly recommended to have more to ensure that there is sufficient competition in case the framework contract is terminated with one of the framework contractors. There is no priority amongst framework contractors. The contracting authority sends a request for specific contract to all the framework contractors (in a given lot, if applicable) who are put into competition to provide a specific tender within a contractually defined time limit.

• Multiple framework contract with both cascade and reopening of competition: the contracting authority may envisage a framework contract in which some of the specific contracts will be awarded according to the cascade system and others will be awarded by reopening of competition between framework contractors. The tender specifications must explain exactly which services will be subject to one or the other award mechanism. The choice cannot take place during framework contract implementation at the discretion of the contracting authority.

The termination of the multiple framework contract with reopening of competition with one framework contractor may have a negative consequence on the functioning of the whole framework contract: less competition and/or higher risk of collusion between the remaining framework contractors. If there are less than three framework contractors, the contracting authority shall make a risk assessment whether the framework contract can be continued. If there is only one remaining contractor, the multiple framework contract with reopening of competition must be terminated.

In a framework contract with cascade, a minimum of two contractors is sufficient for signing a framework contract. Nevertheless, if there is only one tender satisfying all minimum requirements, the authorising officer shall make a risk assessment, and may decide to cancel the procedure or sign a single framework contract.

The most common framework contract type used by external action services is the multiple framework contract with reopening of competition. Single framework contracts and multiple framework contracts in cascade are used for standard purchases: where the terms laid down in the framework contract are sufficiently precise to cover future purchases. Multiple framework contracts with reopening of competition are used where the technical specifications of the framework contract are not precise or complete enough to cover its assignments.

The duration of a framework contract may not exceed four years, save in exceptional cases where a longer duration may be justified in particular relating to the subject matter of the framework contract. The duration of the framework contract is followed by a survival period. This period is specified in the framework contract. During the survival period no requests for specific contract can be launched and no specific contract can be concluded. However, specific contracts concluded before the expiry of the framework contract can still be implemented. With the end of the survival period, all remaining specific contracts are automatically terminated.

The value of the framework contract must be estimated over its total duration. A maximum total amount in EUR (the ceiling) must be indicated in the award decision, in the award notice and in the framework contract itself. The framework contract can then be “consumed” up to that ceiling. It is the responsibility of the contracting authority of the framework contract to monitor the actual spending and to ensure that the maximum ceiling of the framework contract is not reached. The ceiling of the framework contract can be increased on the condition that the extent of possible new services has been indicated in the contract notice.

Contracting authorities may not make undue use of framework contracts or use them in such a way that the purpose or effect is to prevent, restrict or distort competition. The award of a framework contract always requires a public procurement procedure. However, once a framework contract has entered into force, the award of specific contracts follows a request for specific contract sent by the contracting authority to the framework contractors. A specific contract or an order form is then concluded. Specific contracts based on framework contracts are thus awarded in accordance with the terms of the framework contract. Hence, when awarding specific contracts under a framework contract, the procedure set out in the framework contract should be followed and not the general PRAG rules applicable to tenders. The principles of transparency, proportionality, equal treatment and non-discrimination also apply to requests for specific contracts.

2.6.6. Dynamic purchasing system[107]

A dynamic purchasing system is a completely electronic process for making commonly used purchases, for a limited period, which is open to any economic operator who meets the selection criteria and has submitted a technically compliant indicative tender. No specific threshold applies.

For each individual contract, the contracting authority publishes a contract notice and invites all contractors admitted to the system to bid. The contract is awarded to the tenderer who has submitted the most economically advantageous tender on the basis of the award criteria set out in the contract notice. See Section 4.2.6.2. for further details.

2.6.7. Competitive dialogue[108]

In the case of particularly complex contracts, where the contracting authority considers that neither direct use of the open procedure nor the arrangements governing the restricted procedure will result in the best value for money, it may use the competitive dialogue. A contract is considered to be ‘particularly complex’ if the contracting authority is objectively unable either to specify the technical means of satisfying its needs or objectives or to specify the legal or financial makeup of the project. No specific threshold applies. This procedure is, however, exceptional and must be used with caution.

Contracting authorities must publish a contract notice/additional information about the contract notice setting out or attaching their needs and requirements. They must open a dialogue with the candidates satisfying the selection criteria. The dialogue may cover all aspects of the tender; however, it is conducted separately with each candidate on the basis of their proposed solutions and ideas. The contracting authority must ensure equal treatment of tenderers and keep the tenders confidential. It is therefore not allowed to pick the best solutions from different tenderers (i.e. no ‘cherry-picking’ is allowed).

The minimum number of candidates invited to tender is three. Before selecting the candidates, the contracting authority checks that none of the candidates or their partners is in an exclusion situation in the EDES system (see Section 2.4.2.) or listed in EU restrictive measures (see Section 2.4.1.). If fewer than three candidates meet the selection criteria, the contracting authority may continue the procedure with the one or two who do meet the criteria. The contracting authority may not make up the number with other economic operators who did not take part in the procedure or candidates who do not meet the selection criteria.

During the dialogue, the contracting authority must treat all tenderers equally and ensure that the solutions proposed or other information received in the dialogue is kept confidential unless the candidate agrees to disclosure.

The contracting authority may reduce the number of solutions for dialogue by applying the award criteria at a pre-dialogue stage, if the contract notice informs candidates of this possibility. The contracting authority must prepare a report explaining the manner in which dialogue was conducted.

The contracting authority must inform tenderers who are not in an exclusion situation, whose tender is compliant with the procurement documents and who make a request in writing, of the progress of dialogue. Such information should not prejudice the legitimate commercial interest of tenderers or distort fair competition between them. After informing the participants that the dialogue has been concluded, contracting authorities must ask them to submit their final tenders on the basis of the solutions presented and specified during the dialogue. The tenders must contain all the information required and necessary for the performance of the project. At the request of the contracting authority, these tenders may be clarified, specified and fine-tuned, provided this does not have the effect of changing basic aspects of the tender or of the invitation to tender, variations in which could distort competition or have a discriminatory effect. At the request of the contracting authority, the tenderer offering best value for money may be asked to clarify aspects of the tender or confirm commitments contained in the tender provided this does not have the effect of amending substantial aspects of the tender or of the call for tenders and does not risk distorting competition or causing discrimination.

The contracting authorities may specify prices or payments to the participants in the dialogue.

The contract is awarded to the technically compliant tender which is the most economically advantageous (i.e. the sole criterion is the best price-quality ratio).

The standard templates must be adapted as required.

2.6.8. Negotiated procedure / single tender procedure

A contract may be awarded directly to an economic operator in the following circumstances:

• using the ‘single tender procedure’ when the contract does not exceed EUR 20 000;

• using the ‘negotiated procedure’ regardless of the value of the contract in exceptional and duly justified cases, provided the factual or legal circumstances described in Sections 3.3.5.1., 4.2.6.1. and 5.2.5.1. are met. No specific threshold applies in such cases.

In addition, payments for amounts less than or equal to EUR 2 500 may be made against invoices without prior acceptance of a tender. However, the budgetary commitment against which the invoice is paid, has to be validated before the contracting authority enters into the corresponding ‘legal commitment’. In this context, such legal commitment may take the form, inter alia, of an agreement, a pro-forma invoice, a written acceptance of a quotation, a booking confirmation, an order form, etc.

Before selecting the candidates, the contracting authority checks that none of the candidates or their partners is in an exclusion situation in the early detection and exclusion system (see Section 2.4.2.) or listed in EU restrictive measures (see Section 2.4.1.).

2.6.8.1. Negotiated procedure

The negotiated procedure may only be used in cases stipulated in this practical guide. No prior approval can be granted to apply the negotiated procedure in cases others than the ones stipulated in this practical guide.

In the case of negotiated procedures, an evaluation committee or a simplified evaluation committee must be nominated prior to proceeding with the negotiation (see Section 2.9.1). However, depending on a risk analysis by the contracting authority, appointing an evaluation committee might not be deemed necessary in the following cases:

• extreme urgency not attributable to the contracting authority;

• crisis situation;

• new services or works consisting in the repetition of similar activities as in the original contracts, provided the conditions laid down in Sections 3.3.5.1., point e) and 5.2.5.1., point c) are met;

• additional supplies, provided the conditions laid down in Section 4.2.6.1., point d) are met;

• supplies quoted and purchased on a commodity market;

• legal services which do not have mandatorily to be awarded through a simplified procedure (see Section 3.3.5.1.(f)).

For all negotiated procedures, even when no evaluation committee is appointed, an evaluation report must be produced (Annex a10a). The evaluation report explains the grounds for the award decision: how participant(s) in the negotiations were chosen, how they met the selection criteria, how the price was set, and if the tender is technically acceptable on the basis of the award criteria.

The negotiation steps shown in the evaluation report template must be followed. Eligibility rules (nationality as well as exclusion situations mentioned in Sections 2.3.1. and 2.4.1. and EU restrictive measures in Section 2.4.2.) and selection criteria must be duly complied with. Documentary evidence for exclusion criteria and selection criteria should be submitted as referred to in Sections 2.4.2.3. and 2.6.11., respectively.

The contracting authority shall negotiate with tenderers the initial and any subsequent tenders or parts thereof, except their final tenders, in order to improve their content. The minimum requirements and the criteria specified in the procurement documents shall not be subject to negotiation[109].

The negotiated procedure covers two different types of negotiations for which different templates should be used:

• negotiation with one or several economic operators, which, if successful, will result in the award of a new contract.

• negotiation with one economic operator to which the contracting authority awarded an initial contract. The amendment of the initial contract is the outcome of the procedure. This type of negotiated procedure takes place to procure similar services or works or additional supplies (see also Section 2.11.2.1.).

Negotiated procedure resulting in the award of a new contract

The tender dossier, to be drafted and approved by the relevant contracting authority for the negotiated procedure before launching the procedure, shall include at least the invitation letter, contract notice with the selection and award criteria, Instructions to Tenderers, standard draft contract, relevant annexes and terms of reference/technical specifications. It shall also include the administrative compliance grid and the evaluation grid. In case of:

• services and works: the templates of the simplified procedure, with the exception of the contract and its annexes, should be used and adapted on a case-by-case basis.

• supplies: the standard templates shall be used and adapted on a case-by-case basis.

The invitation letter shall specify that it is a negotiated procedure and outline the process.

Negotiated procedure resulting in the amendment of an initial contract[110]

The conditions stated in Section 3.3.5.1. point e), 4.2.6.1. point d) or 5.2.5.1. point c) should be met in case a negotiated procedure takes place to procure similar services or works or additional supplies. Annex a8 is the template to be used to invite to tender for an amendment of a contract. The invitation letter describes the scope and the revised terms of reference/technical specifications. The invitation letter also provides the necessary background information, outlines the negotiation process and indicates the deadline to receive the offer. The amendment of the initial contract is the outcome of the procedure. However, in specific and well justified cases, the negotiated procedure can result in the award of a new contract.

For both types of negotiated procedures, there is no minimum time-limit for receiving tenders. However, tenderers should be given reasonable time to prepare good tenders, especially taking into account the complexity of the contract. The minimum requirements included in the terms of reference / technical specifications and the exclusion, selection and award criteria specified in the procurement documents are not negotiable. Whenever appointed, the evaluation committee may organise negotiation round(s) and possibly invite the tenderer(s) to discuss the technical and financial offer(s), which can be disclosed at any time during the process. In such cases, recommendations on the award decision will be made by the evaluation committee on the basis of the outcome of discussions held during the negotiation(s) round(s) and will be documented in the evaluation report.

The contracting authority may award a contract on the basis of the initial tender without negotiation where it has indicated in the procurement documents that it reserves the possibility to do so.

The contracting authority must inform tenderers who are not in an exclusion situation, whose tender is compliant with the procurement documents and who make a request in writing, of the progress of negotiation. Such information should not prejudice the legitimate commercial interest of tenderers or distort fair competition between them.

After the completion of the evaluation report, the contracting authority shall take the award decision. Moreover, a contract award notice must be published in case the value of the modification is equal to or higher than EUR 300 000 for service and supply contracts, or equal to or higher than EUR 5 000 000 for works contracts.

2.6.8.2. Single tender

The contracting authority chooses one economic operator and justifies its choice.

Priority must be given to local and regional contractors to promote local capacities, markets and purchases (see Section 2.6.9.)[111].

In case of a single tender, it is not mandatory to appoint an evaluation committee.

An evaluation report must be produced (Annex a10a). The evaluation report explains the grounds for the award decision: how participant(s) in the negotiations were chosen, how they met the selection criteria, how the price was set, and if the tender is technically acceptable on the basis of the award criteria.

E-mail submission shall apply to the single tender procedure, provided the authorising officer, after risk assessment, has established procedures and technical tools for keeping the integrity and confidentiality of tenders. In addition, it is recommended to use a dedicated functional mailbox for the procedure and to verify regularly if new messages have arrived in the functional mailbox.

If the authorising officer cannot establish procedures and technical tools for keeping the integrity and confidentiality of tenders via functional mailboxes, the templates should be adapted to the paper submission option.

2.6.9. Preferences

No preference for nationals or entities established in ACP States is possible in procurement procedures under MFF 2021-2027. Nevertheless, in order to promote local capacities, markets and purchases, priority must be given to local and regional contractors when the applicable Financial Regulation provides for an award on the basis of a single tender[112]. In all other cases, participation of local and regional contractors must be promoted in accordance with the relevant provisions of that regulation.

For procurement award procedures under EDF, please refer to Section 2.6.9. of PRAG 2021.

2.6.10. Abnormally low tenders and foreign subsidies

2.6.10.1. Abnormally low tenders (ALT)[113]

The concept of abnormally low tenders refers to situations where the price of the tender of an economic operator raises doubts as to whether the tender is economically sustainable and compliant with applicable legal obligations and whether it can be performed in accordance with the tender requirements.

The obligations of the contracting authority in such situations are as follows:

• identify suspect tenders (first stage assessment);

• investigate abnormally low tenders (second stage assessment);

• reject abnormally low tenders;

• state reasons in evaluation report where after second stage assessment and investigation of a suspiciously abnormally low tender, it concluded that the tender was not abnormally low or that it was abnormally low.

In the first stage of assessment, the contracting authority has an obligation to identify tenders that appear to be abnormally low. During this first stage, the contracting authority does not need to request details in writing by the tenderer, nor does it need to carry out a detailed analysis of the constituent elements of each tender to establish that it is not abnormally low. It only has an obligation to determine whether the tenders submitted contain evidence such as to raise suspicion that they might be abnormally low.

The contracting authority should be careful to identify evidence/indications that could raise suspicion as to the abnormally low character of a tender. Evidence that could raise suspicion that a tender might be abnormally low are in particular the following:

• if it does not appear certain whether a tender complies with the legislation of the country in which the services are to be provided regarding: the remuneration of staff, contributions to the social security scheme, compliance with occupational safety and health standards, selling at a loss,

• if it does not appear certain whether the price proposed includes all the costs generated by the technical aspects of the tender;

• where the price proposed in a tender submitted is “considerably”/significantly less than that of the other tenders submitted or the normal market price;

• where there is a considerable difference between the price proposed and the estimated value of the procurement.

If the evidence does not confirm the suspicion, and therefore the tender does not appear to be abnormally low, the contracting authority may continue the evaluation of that tender and the award procedure for the contract. However, the contracting authority needs to be prepared to state reasons on why it concluded that the tender does not appear to be abnormally low.

The obligation to inform the unsuccessful tenderer of the reasons why the successful tender does not appear to be abnormally low, arises only if an unsuccessful tenderer that fulfils the criteria under Article 173 FR (Section 2.10.1.1.), has made an express written request to examine a potentially abnormally tender. In this case, the contracting authority must proceed to the second stage assessment.

The contracting authority has an obligation to conduct a second stage detailed examination of the suspicious tender to check whether the latter is indeed abnormally low when:

• after the first stage assessment, the contracting authority has concluded that there is evidence that could raise suspicion that a tender is abnormally low, or

• the doubts as to the abnormally low character of the successful tenderer were raised in a substantiated manner by the unsuccessful tenderer.

In such a case, the contracting authority would have to suspend contract signature, reopen the evaluation phase and properly conduct a second stage assessment.

During the second stage assessment, the contracting authority must request in writing details of the constituent elements of the price or costs which it considers relevant and shall give the tenderer the opportunity to present its observations. The contracting authority can never reject a tender automatically without having given the economic operator the opportunity to provide explanations and justify the price, even if a tender is priced at EUR 0.00.

The evidence requested may include detailed information accompanied by appropriate documentation on the production process, facilities, social conditions, certificates, environmental standards etc. In view of the evidence provided by the tenderer, the contracting authority decides on whether to reject the tender or not.

The contracting authority needs to verify that the tender is compliant with applicable obligations in the fields of environmental, social and labour law, and namely with the national legislation of the country in which the services were to be provided in respect of the remuneration of staff, contributions to the social security scheme and compliance with occupational safety and health standards and with rules prohibiting sale at a loss. The contracting authority also needs to verify that the proposed price included all the costs arising from the technical aspects of the successful tender.

After conducting this second stage assessment, the contracting authority has a duty to state reasons to:

• the successful tenderer whose offer was rejected as abnormally low (if the tenderer was found abnormally low);

• the unsuccessful tenderers as to why the successful tender was not abnormally low.

As regards the scope of obligation to inform the unsuccessful tenderers, the statement of reasons needs to include such details as to allow the unsuccessful tender to understand how the contracting authority has arrived at the result at issue and enable them to challenge the merits of that assessment.

Both the decision and its justification must be recorded in the evaluation report.

2.6.10.2. Foreign subsidies

The Financial Regulation provides for the application of the Foreign Subsidies Regulation[114] which aims to address concerns about foreign subsidies distorting competition within the EU internal market.

The application of this regulation implies the right of the European Commission to investigate tenders in public procurement involving financial contributions by non-EU governments. These investigations can be triggered by:

1. information received from candidates/tenderers in certain award procedures (see below);

2. European Commission’s own initiative if it suspects the existence of distortive foreign subsidies in all other cases.

1. Obligation to inform the contracting authority

Economic operators must notify the contracting authority about foreign financial contributions of at least EUR 4 million per third country in the last 3 years in public procurement procedures with a contract value of at least EUR 250 million. If the procurement procedure is divided into lots, the obligation to notify will apply where the estimated value of the procurement exceeds EUR 250 million and the value of the lot or the aggregate value of all the lots to which the candidate/tenderer applies is equal to or greater than EUR 125 million.

Economic operators need to submit the simpler declaration instead of a notification if contributions received from a non-EU country are below EUR 4 million in the 3 years prior to the notification.

The obligation to notify applies to economic operators, group of economic operators, as well as to main subcontractors and main suppliers known at the time of submission of the complete notification or declaration, or complete updated notification or declaration. A subcontractor or supplier shall be deemed to be main where their participation ensures key elements of the contract performance and in any case where the economic share of their contribution exceeds 20 % of the value of the submitted request to participate/tender.

In an open procedure, the notification or declaration shall be submitted only once, together with the tender. In a restricted procedure, the notification or declaration shall be submitted twice, first with the request to participate and then as an updated notification or updated declaration with the submitted tender.

Where a notification or declaration is missing from the request to participate or the tender, the contracting authority may request the economic operators concerned to submit the relevant document within 10 working days. If the request is made and the notification/declaration is not submitted, the economic operator shall be declared irregular and rejected from the procurement procedure. The European Commission shall be informed of this rejection procedure.

Where the contracting authority examining tenders suspects the presence of foreign subsidies, although a declaration was submitted, it shall communicate such suspicions to the European Commission without delay.

For the ex officio procedure, where the European Commission suspects that an economic operator may have benefitted from foreign subsidies in the three years prior to the submission of the tender or request to participate in the public procurement procedure, it may before the award of the contract request the notification of the foreign financial contributions in any public procurement procedure where no notifiable foreign financial contribution has been declared.

2. Examination

Once the notification or declaration is submitted, the contracting authority shall transfer the notification or declaration to the European Commission without delay.

First, the European Commission shall examine the content of the notification received without undue delay. Where the Commission finds that the notification is incomplete, it shall communicate its findings to the contracting authority and to the economic operator concerned, and request that the economic operator completes its content within 10 working days. Where a notification accompanying a tender or request to participate remains incomplete despite a request made by the European Commission, the Commission shall adopt a decision declaring that tender irregular. In that decision the European Commission shall also request the contracting authority to adopt a decision rejecting such an irregular tender or request to participate (see Section 2.4.2.2.).

Second, the European Commission shall carry out a preliminary review no later than 20 working days after it receives a complete notification, with a possible extension by 10 working days in exceptional cases. The European Commission may launch an in-depth investigation into an economic operator suspected of receiving unfair foreign subsidies. This happens after a preliminary review finds evidence and involves informing the economic operator, relevant authorities, and interested parties. If the evidence is lacking, the European Commission will adopt a decision to raise non-objection and the investigation will not proceed.

In restricted procedures, the European Commission shall not close the preliminary review or reach a decision on opening an in-depth investigation after the 20 working days from the receipt of that notification. After the deadline of 20 working days elapses, the preliminary review shall be suspended until the submission of the tender. Once the tender containing a complete updated notification is submitted, the preliminary review shall be resumed and the European Commission has 20 working days to finalise it, taking into account any additional information.

Third, the European Commission shall decide whether to initiate an in-depth investigation within the time limit for completing the preliminary review and inform the economic operator concerned and the contracting authority without delay.

If the European Commission conducts an in-depth investigation to assess the impact of a foreign subsidy, the investigation concludes with a decision within 110 working days, with a possible extension by 20 working days in exceptional cases. In restricted procedures, the European Commission shall adopt a decision closing any ensuing in-depth investigation within 90 working days from the submission of the completed updated notification.

The investigated tenderer cannot be awarded the contract (standstill obligation) until the end of the investigation or the time limit elapses. All procedural steps of the procurement process can proceed during preliminary reviews and in-depth investigations, except contract award.

At the end of the in-depth investigation, the European Commission shall take a decision (see Article 31 of the Foreign Subsidy Regulation). In case, the European Commission decides to prohibit the award of the contract, the contracting authority shall reject the tender (see Section 2.4.2.2.).

2.6.11. Selection and award criteria

2.6.11.1. General principles

The contracting authorities must draw up clear and non-discriminatory selection criteria for the purpose of assessing that the candidate/tenderer has sufficient economic, financial, professional, and technical capacity to implement the tasks of the contract. The chosen criteria must be proportionate and may not go beyond the scope of the contract.

For contracts divided into lots, different minimum levels of capacity can be set for each lot. Additional levels of capacity can be added for the case several lots are awarded to the same tenderer.

The templates of the contract notice, additional information about the contract notice, or the instructions to tenderers, include examples of criteria to be used in the procedure. Below are examples of criteria not to be used:

• requesting disproportionate annual turnover, number of personnel, number of previous projects, etc. as regards the amount of the contract;

• using imprecise terms such as ‘sufficient’, ‘major’, ‘relevant’ as they are too ambiguous;

• requesting a percentage of the personnel working in specific fields as this may be discriminatory for large companies;

• requesting technical experience relating to EU projects only, as this may in general be regarded as discriminatory;

• requesting prior experience in the partner country, unless specific justification is provided, as this could in general be regarded as discriminatory;

• requesting technical experience in an overly prescriptive manner that effectively restricts the number of eligible candidates to one or a few firms.

When deciding on the appropriate criteria, contracting authorities must consider whether compliance can be proved and should, for instance, consider what type of documentary evidence the tenderer may submit as proof.

The selection criteria must be specified in the contract notice/additional information about the contract notice/instructions to tenderers. The selection criteria must be applied by the contracting authority without modification, unless a corrigendum/change notice has been published.

The additional information to the contract notice must clarify how each selection criterion will be assessed in the case of application submitted by a consortium. For instance, some criteria aiming at assessing the economic and financial capacity might not be checked on the basis of aggregate values but are rather to be met by each member of a consortium.

The candidates/tenderers are asked to provide a declaration on honour and to indicate in the application form or tender submission form their economic, financial, professional, and technical capacity in accordance with the selection criteria laid down in the tender documents. Previous experience that would have led to breach of contract and termination by a contracting authority must not be used as reference. This is also applicable concerning the previous experience of experts required under a fee-based service contract.

Shortlisting

In case of the international restricted procedure, it is important to seek to enhance the quality of short-listed economic operators rather than merely seeking to shortlist economic operators that have the biggest project references, e.g. reference to the number of projects presented above the value of the contract being procured should be avoided. Rather, the pertinence of experience should be advantaged, e.g. in the technical area and/or in similar contexts.

The contracting authority must shortlist a maximum of eight candidates (six in case of an international restricted procedure for works). The contracting authority will also publish criteria in addition to economic and financial, professional, and technical ones. These additional criteria will only be used to reduce the shortlist to eight candidates (six for works). These criteria must therefore not be drafted in such a way that they would reduce genuine competition[115]. For example, a criterion such as ‘experience in the country’ is too restrictive and should be avoided.

Documentary evidence

The documentary evidence of the economic, financial, professional, and technical capacity according to the selection criteria specified in the additional information about the contract notice (Annex a5f) has to be provided:

• for service award procedures: by the presumed successful tenderer at the evaluation stage upon request of the contracting authority;

• for supply award procedures: by the presumed successful tenderers before the award of the contract;

• for works award procedures: in accordance with the tender dossier.

When in doubt about the authenticity of the documents provided, the contracting authority should carry out additional checks and request additional documents.

If the documentary evidence submitted is not written in one of the official languages of the European Union, a translation into the language of the procedure must be submitted. Where the documents are in an official language of the European Union other than the one of the procedure, it is however strongly recommended to provide a translation into the language of the procedure, in order to facilitate the evaluation of the documents.

If the candidate/tenderer is unable to provide the evidence requested for some exceptional reason that the contracting authority finds to be justified, it may prove its capacity by any other means which the contracting authority considers appropriate (see also Section 2.9.3.).

If the tenderer submits a self-declaration/statement as documentary proof, the contracting authority reserves the right to ask for further documentary evidence.

For contracts with a value less than the international thresholds (services < EUR 300 000, supplies < EUR 300 000 and works < EUR 5 000 000), the contracting authority may, depending on its assessment of risks, decide not to require evidence of economic, financial, professional, and technical capacity of economic operators.

With the exception of duly justified cases, no pre-financing must be made when the contracting authority decides not to require evidence of economic, financial, professional, and technical capacity.

Professional certificates and ISO certifications

A professional certificate is a credential provided to an organisation or to an individual after the completion of a standardised certification or accreditation procedure. In certain business sectors it may also be a legal requirement for exercising a professional activity. Many certification programs are affiliated with professional associations or trade organisations. Certifications are very common in fields such as aviation, construction, technology, environment, and other industrial sectors, as well as healthcare, business, real estate, and finance.

ISO certifications refer to the provision by an independent and usually accredited body of written assurance (a certificate) that a product, a service or a system meets specific requirements.

These two types of certificates may be required as a professional selection criterion, depending on whether they are required for individuals who will perform the contract, or to certify a company's compliance with established standards.

Capacity-providing entities and subcontractors

A candidate/tenderer may, where appropriate and for a particular contract, rely on the capacity of other entities, regardless of the legal nature of the links that it has with them, to fulfil one or more selection criteria:

• For fulfilling the technical or financial capacity criteria: different candidates/tenderers can rely on the same capacity providing entity.

• For fulfilling professional and technical criteria: an economic operator may only rely on the capacities of other entities where the latter will perform the works or services for which these capacities are required.

• For fulfilling economic and financial capacity criteria, the entities upon whose capacity the economic operator relies become jointly and severally liable for the performance of the contract.

If the candidate/tenderer relies on other entities it must prove to the contracting authority that it will have the necessary resources available to implement the contract, by producing a commitment by those entities to place such resources at its disposal. Such entities, for instance the parent company of the economic operator, must respect the same rules of eligibility, and notably that of nationality, that apply to the economic operator relying on them.

The contracting authority must verify whether the entities on whose capacity the economic operator intends to rely and the envisaged subcontractors, fulfil the relevant selection criteria. The data for these entities as concerns the relevant selection criterion must be included in the tender in a separate document. Proof of the capacity will also have to be provided when requested by the contracting authority.

The contracting authority must require that the economic operator replaces an entity or subcontractor who does not meet a relevant selection criterion.

The contracting authority may request information from the tenderer on any part of the contract that the tenderer intends to subcontract and on the identity of any subcontractors.

In the case of works contracts, service contracts and siting or installation operations in the context of a supply contract, the contracting authority may require that certain critical tasks be performed directly by the tenderer itself or, where the tender is submitted by a consortium, a participant in the group.

The contracting authority must not demand that a consortium have a legal form in order to submit a tender or request to participate, but the selected group may be required to adopt a legal form after it has been awarded the contract if this change is necessary for proper performance of the contract.

Number of requests to participate or tenders and cross-subcontracting

The contracting authority may define specific rules in the tender documents with a view to ensuring that tenders are drawn up and submitted in complete independence and autonomously from the other tenders.

More specifically, Annex a5f (additional information on the contract notice) provides in its point 6 ‘Number of requests to participate or tenders’ that no more than one request to participate or tender can be submitted by a natural or legal person whatever the form of participation (as an individual legal entity or as leader or member of a consortium submitting a request to participate or tender). In the event that a natural or legal person submits more than one request to participate or tender, all requests to participate or tenders in which that person has participated will be excluded. In case of lots, the candidates or tenderers may submit only one request to participate or tender per lot. Contracts will be awarded lot by lot and each lot will form a separate contract. If the tenderer is awarded more than one lot, a single contract may be concluded covering all those lots.

The contracting authority can define in addition in the instructions to tenderers that cross-subcontracting among tenderers is forbidden. This means that an entity “A” may participate as tenderer (either as sole tenderer or as member of a group of economic operators) and as subcontractor for another tenderer “B” within the same procurement procedure. However, in this case it is forbidden that tenderer “B” (or any of its participating members in case of a consortium) is at the same time subcontractor for tenderer “A” (or for the group of economic operators in which “A” participates) within the same procurement procedure. In this scenario, cross-subcontracting being prohibited, both tenders A and B shall be rejected.

Rejection of tenders based on the aforementioned reason should be done with caution and be motivated, following a proper assessment by the contracting authority. In case of doubt, if the relationship between the tenderers is not clear to the contracting authority, then the contracting authority should send a request for clarifications to the tenderers before rejecting them.

In addition, the contracting authority should refrain from automatically rejecting tenders submitted by economic operators linked by a relationship of control or of association (e.g. sister companies or parent and subsidiaries). Tenderers in such a situation are allowed to submit different and separate tenders provided that each tenderer is able to demonstrate that its tender was drawn up independently and autonomously.

2.6.11.2. Economic and financial capacity[116]

The objective of the economic and financial capacity criterion is to examine whether the candidate will not be economically dependent on the contracting authority in the event of the award of the contract and that it has sufficient financial stability to handle the proposed contract.

To ensure that economic operators possess the necessary economic and financial capacity to perform the contract, the contracting authority may require in particular that:

1. economic operators have a certain minimum yearly turnover, including a certain minimum turnover in the area covered by the contract;

2. economic operators provide information on their annual accounts showing ratios between assets and liability;

3. economic operators provide an appropriate level of professional risk indemnity insurance.

For the purposes of point (a), the minimum yearly turnover must not exceed two times the estimated annual contract value, except in duly justified cases linked to the nature of the purchase, which the contracting authority must explain in the procurement documents.

For the purposes of point (b), the contracting authority must explain the methods and criteria for such ratios in the procurement documents.

In the case of dynamic purchasing systems, the maximum yearly turnover must be calculated on the basis of the expected maximum size of specific contracts to be awarded under that system.

The contracting authority must define in the procurement documents the evidence to be provided by an economic operator to demonstrate its economic and financial capacity. It may request in particular one or more of the following documents:

1. appropriate statements from banks or, where appropriate, evidence of relevant professional risk indemnity insurance;

2. financial statements or their extracts for a period equal to or less than the last 3 years for which accounts have been closed;

3. a statement of the economic operator’s overall turnover and, where appropriate, turnover in the area covered by the contract for a maximum of the last 3 financial years available.

If, for any valid reason, the economic operator is unable to provide the references requested by the contracting authority, it may prove its economic and financial capacity by any other document that the contracting authority considers appropriate.

2.6.11.3. Technical and professional capacity[117]

The contracting authority must define in the procurement documents the evidence to be provided by an economic operator to demonstrate its technical and professional capacity. It may request one or more of the following documents:

1. for works, supplies requiring siting or installation operations or services, the educational and professional qualifications, skills, experience and expertise of the persons responsible for performance;

2. a list of the following, with a description providing sufficient details on their relevance to the selection criteria:

1. of the principal services provided and supplies delivered in the past 4 years, with the nature of the services, the sums, dates and clients, public or private, accompanied upon request by statements issued by the clients; where necessary in order to ensure an adequate level of competition, the contracting authority may indicate that evidence of relevant supplies or services delivered or performed more than 4 years before will be taken into account;

2. of the works carried out in the last 5 years, accompanied by certificates of satisfactory execution for the most important works; where necessary in order to ensure an adequate level of competition, the contracting authority may indicate that evidence of relevant works delivered or performed more than 5 years before will be taken into account;

3. a statement of the technical equipment, tools or plant available to the economic operator for performing a service or works contract;

4. a description of the technical facilities and means available to the economic operator to for ensuring quality, and a description of available study and research facilities;

5. a reference to the technicians or technical bodies available to the economic operator, whether or not belonging directly to it, especially those responsible for quality control;

6. in respect of supplies: samples, descriptions or authentic photographs or certificates drawn up by official quality control institutes or agencies of recognised competence attesting the conformity of the products clearly identified by references to technical specifications or standards;

7. for works or services, a statement of the average annual manpower and the number of managerial personnel of the economic operator for the last 3 years;

8. an indication of the supply chain management and tracking systems that the economic operator will be able to apply when performing the contract;

9. an indication of the environmental management measures that the economic operator will be able to apply when performing the contract.

The contract the candidate or tenderer refers to could have been implemented at any time during the indicated period, but it does not necessarily have to be completed during that period, nor implemented during the entire period. Candidates or tenderers are allowed to refer either to projects completed within the reference period (although started earlier) or to projects partially implemented during, but not yet completed within the reference period. Only the part completed during the reference period will be taken into consideration. This part will have to be supported by documentary evidence (approval of report or output, proof of payment, statement or certificate from the entity which awarded the contract) also detailing its value.

If a candidate or tenderer has implemented the project in a consortium, the part that the candidate/tenderer has completed must be clear from the documentary evidence (such as consortium agreement and bank transfers between consortium members), together with a description of the nature of the services, supplies or works provided.

Where the supplies or services are complex or, exceptionally, are required for a special purpose, evidence of technical and professional capacity may be secured by means of a check carried out by the contracting authority or on its behalf by a competent official body of the country in which the economic operator is established, subject to that body’s agreement. Such checks must concern the supplier’s technical capacity and production capacity and, if necessary, its study and research facilities and quality control measures.

Where the contracting authority requires the provision of certificates drawn up by independent bodies attesting the compliance of the economic operator with certain quality assurance standards, including on accessibility for disabled persons, it must refer to quality assurance systems based on the relevant European standards series certified by accredited bodies. The contracting authority must also accept other evidence of equivalent quality assurance measures from an economic operator that has demonstrably no access to such certificates or has no possibility of obtaining such certificates within the relevant time-limits, for reasons that are not attributable to that economic operator and provided that the economic operator proves that the proposed quality assurance measures comply with the required quality assurance standards.

Where the contracting authority requires the provision of certificates drawn up by independent bodies attesting that the economic operator complies with certain environmental management systems or standards, it must refer to the European Union Eco-Management and Audit Scheme or to other environmental management systems as recognised in accordance with Article 45 of Regulation (EC) No 1221/2009 of the European Parliament and of the Council of 25 November 2009 on the voluntary participation by organisations in a Community eco-management and audit scheme (EMAS), repealing Regulation (EC) No 761/2001 and Commission Decisions 2001/681/EC and 2006/193/EC[118], or other environmental management standards based on the relevant European Union or international standards by accredited bodies. Where an economic operator had demonstrably no access to such certificates, or no possibility of obtaining them within the relevant time limits for reasons that are not attributable to that economic operator, the contracting authority must also accept other evidence of environmental management measures, provided that the economic operator proves that these measures are equivalent to those required under the applicable environmental management system or standard.

The presence of professional conflicting interests (see Section 2.5.4.4.) shall be examined during the evaluation phase based on the statements made through the declarations on honour and, where applicable, the commitment letters signed by identified subcontractors. For contracts where the impartiality of the contractor is of importance due to their subject matter, it is recommended to assess the absence of such interest on the basis of specific information to be provided by the tenderers/candidates in their tender, as requested in the tender documents/specifications.

2.6.11.4. Award criteria[119]

Contracts are awarded on the basis of the most economically advantageous tender established for the call for tender in one of the following two ways:

• under the best price-quality ratio, in which case the contracting authority takes into account the price and other quality criteria linked to the subject matter of the contract, and apply a weighting formula;

  Quality criteria may include elements such as technical merit, aesthetic and functional characteristics, accessibility, design for all users, social, environmental and innovative characteristics, production, provision and trading process and any other specific process at any stage of the life cycle of works, supplies or services; organisation, qualification and experience of the staff assigned to performing the contract where the quality of the staff assigned can have a significant impact on the level of the performance of the contract; after-sales service, technical assistance or delivery conditions such as delivery date, delivery process and delivery period or period of completion.

  The contracting authority shall specify in the procurement documents the relative weighting which it gives to each of the criteria chosen to determine the most economically advantageous tender.

  The contracting authority may lay down minimum levels of quality. Tenders below those levels of quality must be rejected.

• under the lowest price, provided the tender satisfies the minimum requirements laid down.

The criteria must be precise, non-discriminatory, and not prejudicial to fair competition.

2.6.11.5. Distinction between selection and award criteria

To avoid any legal uncertainty with regard to the conditions of the award of the contract, a firm distinction between selection and award criteria should be made. Particular attention should be made to this distinction when preparing the tender specifications and when evaluating the tenders.

Confusing selection and award criteria constitutes a procedural defect that may result in the annulation of the procedure in case of dispute. Indeed, as confirmed by the case law[120], this confusion could favour certain economic operators at the detriment of others, regardless of the quality of their technical offer.

At the stage of evaluation of award criteria, the contracting authority can no longer review the capacity or ability of the tenderers as already assessed during the selection phase. At this stage, only the technical and financial offers must be evaluated by reference to the award criteria which are to be directly related to the tender specifications. The purpose of award criteria is to assess the intrinsic quality of the offer and may not relate to the capacity of the tenderer.

In this regard, particular attention should be paid when defining award criteria for key experts to avoid overlapping and double evaluation with the requirements related to personnel (professional capacity) in the selection criteria.

2.6.12. Methods of submission

Electronic Submission (eSubmission) has been introduced for the management of procurement award procedures in external actions managed by the European Commission (direct management).

eSubmission is accessible through the Funding & Tenders Portal. eSubmission allows economic operators to electronically submit requests to participate or tenders in a structured and secure way. eSubmission supports the following procurement procedures in direct management:

• Restricted procedures;

• Open Procedures;

• Local open procedures with a contract notice published in the Official Journal;

• Negotiated procedures without prior publication of a contract notice, including all rounds in case the negotiated procedure consists of several rounds;

• Simplified procedures without prior publication of a contract notice.

For award procedures managed in direct management, requests to participate and tenders in the above-mentioned supported procurement procedures must be submitted exclusively via eSubmission. Requests to participate and tenders submitted in any other way (e.g. post, courier, e-mail, hand delivery) will be disregarded.

For single tenders, currently not supported on eSubmission, tenders can be submitted by e-mail, provided the contracting authority, after a risk assessment, has established procedures and technical tools for keeping tenders integer and confidential. Functional Mailboxes shall be created to maintain the integrity and confidentiality of tenders in the same way sealed envelopes maintain the integrity and confidentiality of tenders. The date and time of submission will be the date and time the email has arrived in the functional mailbox.

Functional Mailboxes must be created for each single tender procedure and they should remain functional until the completion of the evaluation procedure and the signature of the contract. The contracting authority shall ensure safe storage of the content and the closure of those Functional Mailboxes. Functional Mailboxes that do not have incoming and outgoing emails will be considered as dormant by the relevant IT services. At a certain moment in time, according to the applicable business rules of the IT services, steps will be taken to close those Functional Mailboxes. For these reasons the content of the Functional Mailboxes needs to be stored in a safe place to avoid the losing of tender documents. Once the content has been stored in a safe place, the contracting authority can take the necessary steps to have the Functional Mailboxes closed.

If a after a risk assessment, the contracting authority cannot establish procedures and technical tools for keeping tenders integer and confidential via Functional Mailboxes, the templates should be adapted to the paper submission option.

For award procedures managed in indirect management, the requests to participate and tenders will continue to be submitted through paper submission. In case of single tender, it is possible to have an e-mail submission under the same conditions applicable to direct management (see above).

2.6.13. Cancellation of procurement procedures[121]

The contracting authority may, before the contract is signed, cancel the procedure without the candidates or tenderers being entitled to claim any compensation. In the case of procedures awarded in lots or multiple sourcing procurement the cancellation may be done partially. For example, if the procedure is divided into lots, single lots may be cancelled.

Cancellation may occur, for example, if:

• the tender procedure has been unsuccessful, i.e. no suitable, qualitatively or financially acceptable tender has been received or there is no valid response at all;

• the economic or technical data of the project have fundamentally changed;

• exceptional circumstances or a force majeure render normal performance of the contract impossible;

• all technically acceptable tenders exceed the financial resources available;

• there have been breach of obligations, irregularities or fraud in the procedure, in particular where these have prevented fair competition (see Section 2.5.8);

• the award is not in compliance with sound financial management i.e. does not obey the principles of economy, efficiency and effectiveness (e.g. the price proposed by the tenderer to whom the contract is to be awarded bears no relation to the market price).

If a procurement procedure is cancelled, all candidates/tenderers having submitted a request to participate or a tender must be notified in writing and as soon as possible of the reasons for the cancellation. If a contract notice was published, this information shall be done through the publication of a cancellation notice (non award notice) . See Annex a11e for additional guidance.

After cancelling a tender procedure, the contracting authority may decide:

• to launch a new tender procedure;

• to re-launch the tender procedure using the same reference as the original call;

• to open negotiations with one or more tenderers who participated in the tender procedure and who meet the selection criteria[122], provided that the original terms of the contract have not been substantially altered (this option is not available if the procedure was cancelled because of irregularities which might have prevented fair competition);

• not to award the contract.

In no event will the contracting authority be liable for any damages whatsoever including, without limitation, damages for loss of profits in any way connected with the cancellation of a tender even if the contracting authority has been advised of the possibility of damages. The publication of a contract notice or the issuance of an invitation to negotiate does not commit the contracting authority to implement the programme or project announced.

2.7. Contract value

See Section 2.6.1.

2.8. Terms of reference and technical specifications (procurement)

Terms of reference (for service contracts) and technical specifications (for supply and works contracts) give instructions and guidance to contractors to submit a tender that responds to all technical and administrative requirements, and later to serve as the contractor’s mandate during project implementation. The terms of reference or technical specifications are included in the tender dossier and will become an annex to the resulting contract.

Thorough preparation of the terms of reference or technical specifications is extremely important for the ultimate success of the project. It is important to ensure that the project has been properly conceived, that the work is carried out on schedule and that resources will not be wasted. Greater effort during project preparation will save time and money at later stages of the project cycle.

The terms of reference and the technical specifications must allow equal access for candidates and tenderers and must not have the effect of creating unjustified obstacles to competitive tendering. They must be clear and non-discriminatory, and proportionate to the objective and/or the budget for the project. They specify what is required of the service, supply or work to be purchased. They also specify the minimum requirements whose non-compliance entails the rejection of the tender. The specifications include:

1. quality levels;

2. environmental and climate performance (e.g. care is taken to ensure that specifications take into consideration the latest developments on the matter);

3. for purchases intended for use by natural persons, design for all users requirements (gender dimension, accessibility for disabled people, environmental issues, etc. in accordance with the latest developments), excepted in duly justified cases;

4. levels of and procedures for conformity assessment, including environmental aspects;

5. performance or use of the supply;

6. safety or dimensions, including, for supplies, the sales name and user instructions, and, for all contracts, terminology, symbols, testing and test methods, packaging, marking and labelling (including environmental labelling, e.g. on energy consumption), production processes and methods.

The terms of reference and technical specifications should be clear and concise. Technical specifications may not point to particular brands and types, and they may not limit competition by being too specific.

The terms of reference or technical specifications are drafted by the contracting authority. Where the European Commission is the contracting authority, the standard practice is to consult and obtain the approval of the partner country and, where appropriate, of other parties involved, on the terms of reference or technical specifications, in order to strengthen both ownership and quality.

Given the technical complexity of many contracts, preparing the tender dossier — particularly the technical specifications / terms of reference — may require the assistance of one or more external technical specialist(s). Each such specialist must sign a declaration of objectivity and confidentiality (see Annex a3).

Once the tender dossiers have been finalised, the tender procedure may be launched as soon as possible. The terms of reference or technical specifications contained in a tender dossier — the basis for the project work-plan — must reflect the situation at the time of project start-up to avoid considerable effort being spent on re-designing the project during the inception period.

The general structure of terms of reference for services reflects the principles of project cycle management. The aim is to ensure that all issues are covered systematically and that key factors related to clarity of objectives and sustainability are thoroughly examined. Annexes b8e and b8f contain skeleton terms of reference that show the minimum details to be provided within each of these section headings.

The terms of reference and the technical specifications may not be disclosed to any third party and must be kept confidential until they are made available to the tenderers simultaneously as part of the procedure.

2.9. The evaluation committee

2.9.1. Appointment and composition

Requests to participate/tenders and grant applications are opened and evaluated by an evaluation committee formally appointed by the contracting authority.

Evaluation committees are composed of an odd number of voting members (the evaluators). There must be a minimum of three evaluators for all procedures except for calls for tenders for works with a value exceeding EUR 5 000 000, which require a minimum of five evaluators.

Evaluation committees may comprise, in addition to the voting members (the evaluators), a non-voting chairperson and a non-voting secretary. An evaluation committee limited to the voting members is referred to as “simplified evaluation committee”.

For award procedures in direct management the evaluators must represent at least two organisational entities of the European Commission with no hierarchical link between them, at least one of which does not come under the authorising officer responsible[123]. Although EU Delegations are exempted from ensuring a hierarchical separation between members of evaluation committees, the hierarchical separation amongst voting members should in principle be applied whenever possible. In order to ensure an appropriate segregation of duties, cumulating the role of authorising officer with that of any member of the evaluation committee must be avoided. If appropriate, on a case-by-case basis, the chairperson may also act as secretary, in particular during periods of limited resources in terms of staff and internal expertise.

In grants, the evaluation committee is appointed for the call for proposals as a whole: there must be no different committees, chairpersons, secretaries or voting members for different lots.

Every member must have a reasonable command of the language in which the application documents are submitted. Evaluators must possess the technical and administrative ability to give an informed opinion on the application documents.

Evaluators must be provided with detailed information regarding the planned timetable and the workload that the evaluation implies.

The evaluation committee should be formed early enough to ensure that members (and any observer) can make the necessary arrangements to make themselves available and to have sufficient time to prepare and conduct the evaluation process. The contracting authority must make sure that evaluators are available during the scheduled evaluation period. The contracting authority will appoint substitutes for each procedure to prevent delays in case of unavailability. Substitutes have to comply with same requirements. In case of withdrawal of a member from the evaluation committee, the member shall be replaced by a substitute evaluator. The chairperson determines to which extent the evaluation process must restart. This decision and any other decision relating to the replacement of a member must be recorded and reasons shall be provided in the said report.

Opening and evaluation committee members must attend all meetings. Any absence must be recorded and explained in the evaluation report. The only exceptions are:

• the opening session meeting in case of procurement procedures where submission of application documents is done through eSubmission, where the presence of the whole opening committee is not required during the technical intervention to start the opening session;

• the opening session meeting in case of grant award procedures.

Although, strictly speaking observers are not part of the evaluation committee, they may attend the sessions of the committee if appointed by the responsible authorising officer. They shall only intervene in the debates at the request of the evaluators or the chairperson.

All evaluators have equal voting rights.

An evaluation committee must be established for all procurement procedures, with the exception of the single tender one (less than or equal to EUR 20 000) and the cases of negotiated procedure mentioned under Section 2.6.8.

For grants procedures, an evaluation committee must be established for all call for proposals. For direct award, it is not required.

For consultation procedures under a framework contract, the guidelines of that specific framework contract should be followed. In case no such guidelines are set, the present rules and Section 3.5.1. apply.

Please refer to Section 6.5.7. as regards use of assessors in case of grants.

2.9.2. Absence of conflict of interest and confidentiality

All members of the evaluation committee and any observers must sign a declaration of absence of conflict of interest and confidentiality (see Annex a4) prior to carrying out any tasks related to the evaluation. Any evaluation committee member or observer who has or might have an actual or potential conflict of interest with any participant must declare it and immediately withdraw from the evaluation committee.

There is a conflict of interests where the impartial and objective exercise of the functions of a financial actor or other person is compromised for reasons involving family, emotional life, political or national affinity, economic interest or any other direct or indirect personal interest (see in detail Section 2.5.4.1.). Should the conflict of interests be established, the member or observer will be excluded from participating further in any capacity in the evaluation meetings.

The chairperson of the evaluation committee decides whether the evaluation process must be restarted. That decision must be recorded and reasons given in the evaluation report.

During the award procedure, all contacts between the contracting authority and participants must be transparent and ensure equal treatment. Those contacts must not lead to any change in the conditions of the contract or the terms of the original tender or call for proposal.

No information about the examination, clarification, or evaluation of tenders, or proposals, or decisions about the award of a contract, may be disclosed before the evaluation report is approved by the contracting authority (and by the European Commission in indirect ex ante management).

Any attempt by a participant to influence the process in any way (whether by making contact with members of the evaluation committee or otherwise), or obtaining confidential information that may confer upon it undue advantages in the award procedure, will result in the immediate exclusion of its tender or proposal from further consideration and might lead to the exclusion from future award procedures according to Section 2.4.2.2.

For service tenders and calls for proposals, the proceedings of the evaluation committee, from the opening of tenders/proposals to the conclusion of the work of the evaluation committee, are conducted in camera and are confidential. For supplies and works tenders, apart from the tender opening session, which is public, the proceedings of the evaluation committee are conducted in camera and are confidential.

The principle that needs to be applied is in camera, meaning in private. Only those appointed by the authorising officer can observe the evaluation process and access the related documents. For this reason, attendance at evaluation committee meetings is strictly limited to the committee members and to any authorised observer (including assessors in the case of call for proposals[124]).

In case of paper submission, proceedings can be held through physical meetings in a room. The room where all documents are located shall be locked when no member of the evaluation committee is present.

Apart from the copies given to the assessors or EU delegations in call for proposals, the tenders or proposals must not leave the room/building in which the committee meetings take place before the conclusion of the work of the evaluation committee. They must be kept in a safe place when not in use.

In case of electronic opening through MyWorkplace and in duly justified cases[125], proceedings can be conducted using videoconference tools. The tool to be used must ensure the confidentiality of the communication and should be Sensitive Non Classified (SNC) compliant. Sharing of information should by preference take place through secure collaborative platforms. If files need to be transferred, the tool used must also guarantee its confidentiality[126]. Each member of the evaluation committee can use their own electronic device in their office to evaluate electronically submitted documents. The principle of in camera and confidentiality shall be respected.

If the national law of the contracting authority in indirect management conflicts with the confidentiality required, then the contracting authority must obtain prior authorisation from the European Commission before disclosing any information.

2.9.3. Responsibilities of evaluation committee members

The chairperson is responsible for coordinating the evaluation process in accordance with the procedures in the practical guide and for ensuring its impartiality and transparency. The voting members of the evaluation committee have collective responsibility for decisions taken by the committee.

The secretary to the evaluation committee is responsible for carrying out all administrative tasks connected with the evaluation procedure. These include:

• circulating and collecting the declarations of absence of conflict of interest and confidentiality;

• keeping the minutes of all meetings of the evaluation committee and the relevant records and documents;

• recording attendance at meetings and compiling the evaluation reports and their supporting annexes.

Any request for clarification requiring communication with the participants during the evaluation process must be conducted in writing. Copies of any such communication must be annexed to the evaluation report.

Where a participant fails to submit evidence or to make statements, the evaluation committee or, where appropriate, the authorising officer responsible shall, except in duly justified cases, ask the participant to provide the missing information or to clarify supporting documents, within a reasonable period of time. Such information, clarification or confirmation shall not substantially change application documents.

If an applicant, who was short-listed by relying on capacity providing entities, submits an offer where the organisation and methodology does not include a written commitment proving that these entities will, depending on the case, perform the work or services for which their capacities are required, and/or will be jointly liable for the performance of the contract, the evaluation committee shall ask the applicant to submit the requested evidence within a reasonable period of time. In case the tenderer fails to do so, the evaluation committee shall not evaluate further the technical offer and shall reject it on those grounds.

If a tender or proposal infringes the formal requirements, the evaluation committee may use its discretion to decide whether it will still be considered during the rest of the evaluation process, while ensuring equal treatment of participants and upholding the principle of proportionality. Any decision of the evaluation committee in that regard must be fully recorded and reasons given in the evaluation report.

Application documents should not be rejected in the following cases:

• If they are submitted in fewer than the number of copies required.

• If they are submitted in the correct format and provide the requisite information, but the document is organised incorrectly, e.g. information is provided in Section X of the form when it should have been provided in Section Y.

• If they have not been signed or contain a scanned signature (the signature can be requested later — but if it is not obtained or if the original document provided later is not exactly the same as the one received earlier, the tender must be rejected). If a tender guarantee is required, the tender must always contain an original of the tender guarantee. If only a copy of the tender guarantee is provided, the tender must be rejected.

• If a participant can demonstrate that a required document is not available (e.g. under national law, duplicates of a given lost document cannot be obtained from the issuing administration), provided that an acceptable alternative is obtained (e.g. a declaration by the said administration that the document for the candidate, applicant or tenderer is still valid but no duplicate can be issued).

• In a service contract award procedure, candidates/tenderers are not supposed to submit all the documentary evidence regarding the exclusion or the selection criteria together with the tender. However, this information shall be ready in case the contracting authority requests it giving a reasonable time limit. The necessary supporting documentation shall be requested in any case from the presumed successful tenderer.

• If information is made available to the evaluation committee that a key expert in a service tender procedure is no longer available. Instead, the evaluation committee should proceed with the evaluation of the original tender and the presumed successful tenderer will be given a chance to propose a replacement for the key expert, see Section 3.4.10.5.

• The tender was sent in a single envelope rather than the two envelopes required, provided the envelope is sealed (the confidentiality of the tender has been preserved).

• The tender combines the technical part and the financial part or has not used the requested standard presentation.

2.9.4. Timetable

The evaluation committee should be formed early enough to ensure that the members (and any observer) can make the necessary arrangements to make themselves available and to have sufficient time prepare and conduct the evaluation process (see also Section 2.9.1.).

In case of procurement award procedures, the tenders must be evaluated in time to allow the procedure to be completed within the validity period of the tenders. Extending the validity of tenders (see Section 2.9.5.) should be avoided. It is very important that all tenderers, whether successful or unsuccessful, receive information without delay.

2.9.5. Period of validity of tenders (procurement only)

Tenderers are bound by their tenders for the period specified in the letter of invitation to tender or in the tender dossier. This period must be sufficient to allow the contracting authority to examine tenders, decide on the award, notify the successful and unsuccessful tenderers and conclude the contract.

From the deadline for the submission of tenders, the period of validity of tenders is fixed:

• for supply and works award procedures: at 90 days;

• for service award procedures: 110 days.

This deadline can be extended before the period of validity expires, subject to a prior approval granted by the competent authority of the European Commission:

• in exceptional circumstances, the contracting authority may ask the tenderers for a one-off, specific extension, which may not exceed 40 days for supply and works award procedures, and 20 days for service award procedures .Such requests and the responses to them must be made in writing. A tenderer may refuse to comply with such a request without forfeiting its tender guarantee. If the tenderer decides to accept the request, it may not amend its tender and it is bound to extend the validity of its tender guarantee for the revised period of validity of the tender.

• when the contracting authority has referred a potential case of exclusion to the EDES panel referred to in Section 2.4.2.1. and for the duration of the procedure before the EDES panel (if the contract is to be awarded to the entity/person concerned by the situation of exclusion, the award of the contract will be suspended until the EDES panel has issued its recommendation).

The unsuccessful tenderers are bound by the tender until the end of the validity period, even if they have received a notification of non-award, and without prejudice to the possibility to extend such period in the cases explained above.

The successful tenderer is bound by the tender for a further 60 days, irrespective of the date of notification of the award of the contract. Therefore, for the successful tenderer, the tender validity period may have the following duration:

• for supply and works award procedures: 90 + 40 (one-off extension)+ 60 (successful)= 190 days

• for service award procedures: 110 days + 20 (one-off extension) + 60 (successful)= 190 days

The purpose of the validity period of tenders is to ensure that a tenderer does not vary his tender during the evaluation stage and that compliance with that period is not a condition for the signature of contracts at the end of the award procedure. Therefore this period can be further extended by mutual agreement between the parties[127].

For procedures where a standstill period has to be respected (Section 2.10.1.1.), there might be cases where the contracting authority suspends the signature of the contract. In these cases, all tenderers have to be informed within 3 working days following the suspension decision, which automatically extends the validity of their tender for the appropriate period.

During the tender validity period of the unsuccessful tenderers, the contracting authority may send a notification of award to the next best ranked tenderer. Upon notification of the new award decision, the validity of the next best ranked tender will be extended by 60 days, This 60-day period is added to the validity period irrespective of the date of notification.

If the validity of their tender has expired, the successful tenderer may refuse the award of the contract.

For consultation procedures under a framework contract, the contracting authority may also request a one-off extension of the validity of the offers submitted, before the original validity period has expired. For these extensions, the guidelines of the specific framework contract should be followed.

2.10. Award decision, contract preparation and signature

2.10.1. Award decision

Once the evaluation has been completed, the contracting authority is required to promptly approve the evaluation report and take the award decision (or non award decision, leading to cancellation). The evaluation report shall be annexed to the decision.

Any failure by the contracting authority to approve the content of the evaluation report or to follow any recommendations and conclusions contained in the report must be subject to a detailed and reasoned written explanation.

For award procedures launched with a suspensive clause (see Section 2.5.9.), no award decision may be taken until: (i) the financing decision/action plan is adopted; (ii) the financing agreement is signed; (iii) the appropriations are available.

For procurement award procedures exceeding EUR 250 million, no award decision may be taken if the European Commission has opened an in-depth investigation on foreign subsidies (see Section 2.6.10.2.).

2.10.1.1. Notifications to the tenderers, standstill period

Notifications to tenderers

Before the validity of the tenders expires but after the award decision is taken, the contracting authority notifies the successful tenderer in writing that its tender has successfully passed the evaluation and informs the tenderer about the maximum contract value. The contracting authority also provides details about the grounds for the decision.

The notification also informs the successful tenderer that the notification does not constitute a commitment on the part of the contracting authority. Until signature of the contract, the contracting authority may cancel the procurement procedure without this entitling the tenderer to any compensation. The successful tenderer is also informed that on the same date, letters will be sent to the unsuccessful tenderer.

Therefore, on the same day, the contracting authority must inform in writing the unsuccessful tenderers that their tender has not been successful in the evaluation. The contracting authority will inform the unsuccessful tenderers of the reasons why their tender was not successful and will provide details about the grounds for the decision.

All notification letters must follow the appropriate template and may be sent electronically or by post.

Notification of the award decision to the successful tenderer automatically extends the validity of the successful tender for 60 days. The notification to the unsuccessful tenderers implies that the validity of their tenders is maintained until the end of the validity period (see Section 2.9.5.).

Standstill period

The contract with the successful tenderer can only be signed after the expiry of the standstill period. The duration of the standstill period is 10 calendar days when using electronic means or 15 days when using other means, starting from the day following the date on which the notification to tenderers was sent.

The standstill period applies to all procurement procedures except:

1. when the value of the contract does not exceed the threshold of EUR 300 000 for service and supply contracts; and EUR 5 000 000 for works contracts;

2. in a procedure where only one tender has been submitted;

3. in the case of specific contracts based on a framework contract;

4. in the case of dynamic purchasing system;

5. in a simplified procedure under Section 2.6.4.;

6. in negotiated procedures without prior publications except for works, supplies or services that can only be provided by a single economic operator (as described in Sections 3.3.5.1.b), 4.2.6.1.b) and 5.2.5.1.i)).

The contracting authority may suspend the signature of the contract for additional examination if this is justified by the requests or comments made by unsuccessful tenderers or by any other relevant information received during the standstill period.

In case of suspension, all tenderers have to be informed within 3 working days following the suspension decision, which automatically extends the validity of their tender for the appropriate period.

In case the evaluation committee revises its initial award recommendation on the basis of examination of information received in the standstill period, and recommends to award the contract to another tenderer, a further standstill period has to be respected following the notification of the new award decision to all unsuccessful tenderers.

During the tender validity period of the unsuccessful tenderers, the contracting authority may send a notification of award to the next best ranked tenderer. However, the tenderer may refuse the award of the contract if, when receiving a notification of award, the validity of their tender has expired (see also Section 2.9.5. on the period of validity a notification of award to the next best ranked tenderer).

2.10.1.2. Notification to grant applicants

See Section 6.5.10.

2.10.2. Contract preparation

When preparing the contract for signature, the contracting authority must prepare a contract dossier with the following structure:

1. explanatory note, using the format in Annex a6.

   The evaluation report describes the award procedure. Therefore, the explanatory note is only required when there are important elements to report between the evaluation and contract signature.

2. copy of the financing decision/ action plan and financing agreement (if any) authorising the project;

3. copy of the call announcements (prior information notice (if applicable) and contract notice, additional information about the contract notice, guidelines for applicants,), shortlist/tender opening record, evaluation report, evaluation reports, award decision, and any other relevant information);

4. the originals of the proposed contract (three originals in indirect management and two in direct management), which is based on the standard contract;

5. all minutes of pre-tender meetings, questions and answers, clarifications and corrigenda issued during the tender procedure, clarifications requests by the evaluation committee and replies received, and any minutes of negotiation meetings on the contract intended for signature. For grant contracts, include minutes of information sessions and published Q&A, if any.

The standard contract annexes including the general conditions, forms and other relevant documents must be reproduced unchanged in every contract. Only the main conditions (for procurement contracts only), the special conditions, and the budget (for grants contracts only) need to be completed by the contracting authority.

The counterparty provides, if required by the contract, the financial guarantee(s), before the signature.

If the counterparty fails to meet any obligation within the specified deadline or indicates at any stage that it is not willing or able to sign the contract, the contract award will be reviewed.

If it is not possible to sign the contract as envisaged in the award decision, or if the counterparty fails to sign the contract as requested, the contracting authority reserves the right to review its decision and, where appropriate, award the contract to another tenderer/applicant or cancel the procedure.

2.10.3. Signature of the contract

2.10.3.1. General

The European Commission intends to progressively introduce electronic systems for all stages of implementation of contracts, starting with the electronic signature of procurement contracts on the Funding & Tenders Portal (for contracts in direct management).

Until contracts are signed on the Funding & Tenders Portal[131], contracts can be signed in blue ink (also known as ‘blue-ink’) and/or using a digital signature. The only digital signature accepted is the Qualified Electronic Signature (QES). The latter is only possible in contracts in direct management.

QES is a standard for electronic signatures under the eIDAS Regulation (Regulation (EU) No 910/2014[132]) and is recognised as the digital equivalent to the handwritten signature in all EU Member States. QES can only be used by Authorising Officers who have obtained a qualified certificate for electronic signatures. The European Commission promotes the signature with QES.

Until the electronic signature of contracts in the Funding & Tenders Portal, the contracting authority will be the first one to sign the contract[133]. Section 2.10.3.2. explains the process for affixing signature depending on the type of signature (blue-ink, QES or a combination).

In the case of grants, the contract must be signed within 3 months from the date of notification of the evaluation results, save in exceptional cases, like complex actions, calls covering more than one budgetary year, calls for proposals launched in the context of facilities, multi-beneficiary contracts, or calls with large number of proposals or where there have been delays attributable to the applicants.

The successful tenderer or grant applicant (referred to as the “counterparty”) shall sign the contract within 30 days of receipt. All contracts must show the actual dates on which the contracting parties signed them.

The contracting authority checks that the natural person who signs the contract for the successful legal entity has the power to represent that legal entity.

The contract takes effect on the date of the last signature. The contract cannot cover earlier services or costs or enter into force before that date, unless in case of grants, in duly substantiated exceptional cases (see Section 6.2.7.).

2.10.3.2. Signature process

For contracts in direct management, before signing the contract the counterparty needs to be contacted to understand the type of signature it intends to affix, as the signature process varies depending on whether QES is used by both parties or only one party. Option 2 to 4 below are not relevant for contracts signed in indirect management by the partner country.

Option 1: Both parties sign blue ink

The next steps are to be followed:

• Step 1: the contracting authority signs and date all originals of the contract. It shall initial all pages of the main conditions (for procurement contracts only), the special conditions and most relevant annexes, including, for grants, the budget.

• Step 2: Send the signed originals of the contract to the counterparty by post.

• Step 3: the counterparty signs and keeps one original and returns the other(s) to the contracting authority.

• Step 4: on receipt of the signed original(s) from counterparty the contracting authority checks that it/they correspond(s) strictly to those sent originally.

Option 2: Both parties sign with QES

If both parties can sign electronically using QES, both parties will sign the same original. There will be no need to send paper documents by post or keep paper copies of the contract. The contract is exchanged via e-mail. The next steps are to be followed:

• Step 1: the contracting authority, applies a qualified electronic seal on the pdf version of the contract[134]. The contracting authority’s electronic seal serves as evidence that an electronic document was issued by the Commission. This seal ensures the origin and integrity of the document. If someone tries to modify or compromise the integrity of a ‘sealed’ document, the seal will no longer be valid.

• Step 2: the contracting authority sends the signed contract in pdf format to the counterparty for signature via e-mail.

• Step 3: the counterparty checks the signature and validity of the certificate.

• Step 4: the counterparty signs the document using QES and sends it back to the contracting authority via email.

• Step 5: upon receipt of the countersigned contract, the contracting authority checks if the content of the document is intact by verifying that the contracting authority’s electronic seal has not been compromised and that the signature used is a valid QES.

Option 3 (hybrid): the Contracting Authority signs with QES, the counterparty signs on paper

In this case the contracting authority signs with QES and the counterparty signs on paper (blue ink). In this case, paper copies are to be kept by each of the parties. The next steps are to be followed:

• Steps 1 to 3 of Option 2 apply.

• Step 4: the counterparty prints two or three copies of the contract;

• Step 5: the counterparty initials each page, affixes its handwritten signature and sends one or two original(s) back to the contracting authority by post. For this purpose, the Contracting Authority should provide the contractor/beneficiary with a postal address.

• Step 6: upon receipt of the countersigned contract, the contracting authority verifies the signature and the initials on the original.

• Step 7: the Contracting Authority scans the signed original, certifies the scan’s conformity with the signed original and registers it in the European Commission digital archiving system (ARES). The new document must be linked to the previous registered document in ARES containing the electronically signed version signed by the contracting authority.

Option 4 (hybrid): the Contracting Authority signs on paper, the counterparty signs with QES

In this case the contracting authority signs on paper (blue ink) and the counterparty signs with QES. Like in option 2, paper copies are to be kept by each of the parties. The next steps are to be followed:

• Steps 1 and 2 of Option 1 apply.

• Step 3: the counterparty scans the contract, signs it with QES and sends it back by e-mail to the contracting authority.

• Step 4: upon receipt of the countersigned contract, the contracting authority checks if the document received by e-mail is intact and corresponds exactly to the signed original carrying the handwritten signature. The contracting authority also checks the validity of the QES from the counterparty and registers the document in the European Commission digital archiving system (ARES). The new document must be linked to the previous registered document in ARES signed by the contracting authority.

2.10.4. Publicising the award of the contract

Transparency is ensured through the publication of award notices (for procurement) and information on recipients.

2.10.4.1. Publication of award notices (procurement)[135]

Upon countersignature of the contract, the contracting authority has to prepare the award notice without delay. Award notices are published whenever the value of the contract is above international thresholds (services > EUR 300 000, supplies > EUR 300 000, works > EUR 5 000 000). This requirement even applies if there was no contract notice, for instance in case of a negotiated procedure.

The only exceptions to the publication of award notices are the following cases:

• where the contract was declared secret and the secrecy is still relevant at the time of the award;

• where the performance of the contract must be accompanied by special security measures;

• where the protection of the essential interests of the EU or the partner country so requires, and where the publication of the award notice is deemed not to be appropriate;

• specific contracts based on a framework contract.

2.10.4.2. Information about recipients[136]

The European Commission must make available in an appropriate and timely manner, information on recipients with due regard for the requirements of confidentiality, security and protection of personal data.

The following information shall be available for contracts in direct management and contracts concluded in indirect management where the Commission makes payments to recipients by 30 June following the financial year in which the contract was concluded[137]:

• whether the recipient is a natural or a legal person;

• for recipients which are a legal person: (i) name and VAT identification number or tax identification number where available or another unique identifier established at country level; (ii) address;

• for recipients which are a natural person: (i) first and last name; (ii) region on NUTS 2 level where the natural person is domiciled in the European Union or the country when the recipient is a natural person and is not domiciled in the European Union;

• the contract amount;

• nature and purpose of the contract.

The information above shall not be published in the following cases:

• education supports paid to natural persons and other direct support paid to natural persons most in need;

• procurement contracts not exceeding EUR 15 000;

• where disclosure risks threatening the rights and freedoms of the persons or entities concerned or harming the commercial interests of the recipients.

The information on beneficiaries can be found in the Financial Transparency System[138].

2.11. Modifying contracts

There may be situations where the contracting parties agree to modify one or several clauses of the contract. The following section lays down general principles that must be complied with. For specific provision see Sections 3.6 (service contracts), 4.7 (supply contracts), 5.7 (works contracts) and 6.7 (grants).

As a preliminary point, it is to be highlighted that a request for changes to the contract must not automatically be accepted by the contracting authority. There must be justified reasons for modifying a contract. The contracting authority must examine the reasons given and reject requests that are not fully substantiated.

2.11.1. Until when contracts can be modified

Contracts cannot be amended after the end of the execution period. The execution period is the period from contract signature until final payment for services or grants, or until release of the performance guarantee after final acceptance for supplies and works. This means that during the closure period used for reporting (services; grants), the warranty defects period (supplies) and the liability period (works), which follows the implementation period when activities are implemented, the contract can still be amended.

Requests for contract modifications must be made by one contracting party to the other. They must be made in time to allow the addendum to be signed by both parties before the expiry of the execution period of the contract.

Any modification extending the period of implementation must be such that implementation and final payments can be completed before the expiry of the financing agreement (if any) under which the initial contract was financed.

In exceptional circumstances, the amendment may have a retroactive effect provided the execution period has not expired. However, the contractor or grant beneficiary will only receive confirmation that the contracting authority has agreed to its request for a retroactive amendment once the addendum has been duly signed or an administrative order has been issued. Since the contracting authority has the right to refuse to sign the addendum or to issue the administrative order, the contractor or grant beneficiary bears the financial risk of any costs incurred or goods and services provided before the addendum or administrative order has been issued. Only once the addendum or administrative order enters into force may the contractor or grant beneficiary claim payment for the costs, goods or services.

Examples:

1. A contractor reports an urgent need to replace a key expert in March, which is accepted in an addendum in April. The amendment enters into force in April, acknowledging the change as from March. The contractor is only entitled to ask for payment for the work carried out in March after the entry into force of the amendment.

2. In a grant, the implementation period expired in May and the grant beneficiary requests a one-month extension in June. If the contracting authority accepts the justification, including for the late request, and issues an addendum in July, the implementation period will be extended by 1 month from May to June. Costs incurred from May to June would only become eligible after the entry into force of the addendum in July.

2.11.2. Type of modifications of procurement contracts[139]

In general, an amendment does not modify substantially the conditions of the initial procurement procedure[140]. Amendments bringing substantial modifications to the contract require a new award procedure. Therefore, a rigorous approach is required when evaluating the necessity and legitimacy of amending the contract.

Amendments shall be processed through an administrative order or an addendum under the conditions provided for in the contract. Some technical amendments are processed through notification. The legal basis of any type of amendment is provided by the Financial Regulation.

Sometimes a modification is made necessary by a failure of the contractor or by a deficiency in implementation that is imputable to it. In this case, all the additional costs created by this modification shall be borne by the contractor.

In indirect management with ex ante controls, amendments must be approved and endorsed by the European Commission.

2.11.2.1. Modification through addendum with award procedure

A modification shall be considered substantial when it alters the subject matter of the contract or framework contract, where it renders the contract or framework contract materially different in substance from the one initially concluded. Substantial amendments require a new award procedure. In any event, a modification shall be considered to be altering the subject matter of the contract or framework contract where one or more of the following conditions are met[141]:

1. the modification introduces or supresses significant conditions which, had they been part of the initial procurement procedure, would have allowed for the admission of other tenderers than those initially selected or for the acceptance of a tender other than that originally accepted, or would have attracted additional participants in the procurement procedure, or would not have led to the selection of the successful tenderer;

2. the modification significantly changes the economic balance of the contract or the framework contract in favour of the contractor in a manner which was not provided for in the initial contract or framework contract;

3. the modification significantly extends the scope of the contract or framework contract.

Modifications consisting in the repetition of similar services or works, or in additional deliveries are a substantial change, and thus require a negotiated procedure in the following cases:

• the change is beyond the limits of the ‘double de minimis rule’ referred to as case c) in Section 2.11.2.2;

• the change is beyond the limits of the modifications brought about by unforeseen circumstances that a diligent contracting authority could not foresee referred to as case b) in Section 2.11.2.2.

The negotiated procedure must comply with:

• the procedural requirements described in Section 2.6.8;

• contract-specific conditions for negotiated procedures. See Sections 3.3.5.1.e (service contracts), 4.2.6.1.d (supply contracts), and 5.2.5.1.c (for works contracts);

• contract-specific conditions on modifications of contract. See Sections 3.6. (service contracts), 4.7 (supply contracts) and 5.7 (works contracts).

In case of service contracts and works contracts, the extent of similar services or works is limited to the ceilings mentioned in the contract notice. A negotiated procedure for similar services or works is not possible in case the possibility has not been announced in a published contract notice[142].

The negotiation takes place with one candidate, the incumbent contractor, or all contractors in case of a multiple framework contract. The standstill period does not apply. The contracting authority takes an award decision and being a new award procedure, a contract award notice must be published.

The explanatory note must provide the legal basis of the modifications and demonstrate that the conditions under which a modification is allowed are fulfilled.

Similar services are different from a contract with renewal. In a contract with renewal, the tasks described in the terms of reference for the first period are repeated over the second period, with for instance conditionality on budget availability. The value of the contract and the award criteria must cover the full duration of the contract including all renewals. This renewal is not subject to procurement procedure as it is part of the contract from the outset. The PRAG does not foresee contracts with renewal clauses, since this option is normally used for contracts awarded for multi-annual operations on administrative appropriations.

2.11.2.2. Modification through addendum without award procedure

Modifications can be done which do not require a procurement procedure, but which are subject to the publication of a modification notice if the value of the modification is equal to or greater than the publication threshold. These modifications can be done on the following basis[143]:

a. for additional works, supplies or services by the original contractor, if the following five cumulative conditions are fulfilled:

1. 1. 1. they have become necessary;

      2. they were not included in the initial procurement (i.e. not similar to the ones which were provided for in the initial contract);

      3. a change of contractor cannot be made for technical reasons linked to interchangeability or interoperability requirements with existing equipment, services or installations;

      4. a change of contractor would cause substantial duplication of costs for the contracting authority;

      5. any increase in price, including the net cumulative value of successive modifications, does not exceed 50% of the initial contract value.

It should be noted that for case (a), the maximum rate of increase remains at 50% of the value of the original contract, not 50% of any increased value of the contract resulting from any earlier modification.

b. where the two following conditions are met:

1. 1. 1. the need for modification has been brought by circumstances which a diligent contracting authority could not foresee;

      2. any increase in price does not exceed 50% of the initial contract value. In case of extreme urgency resulting from a crisis, the contracting authority may, in agreement with the contractor, modify a contract or a framework contract beyond the threshold of 50% and up to 100% of the initial contract value, provided that this is justified as strictly necessary to respond to the evolution of the crisis, and subject to the existence of a crisis declaration[144].

“Circumstances which a diligent contracting authority could not foresee” refers to circumstances that could not have been predicted despite reasonably diligent preparation of the initial award by the contracting authority and should be interpreted strictly. Possible examples of “circumstances which a diligent contracting authority could not foresee” could be natural disasters (earthquake, flooding), man-made disasters (pandemic, conflict, crisis), unexpected change of government resulting in radical changes of public policies or unforeseen geological conditions in case of works contracts.

Where more than one modification is made under case (b), the 50% limit applies to each modification, as unforeseen circumstances can happen repeatedly during a contract, provided that the change is not aimed at avoiding the procurement rules. For instance: there could be the situation where a modification within the 50% limit is required due to an earthquake; later on, another modification might be required due to an armed revolt.

c. where the value of the modifications is below the following thresholds (also known as the double de minimis rule):

1. 1. 1. EUR 300 000 for service and supply contracts, and EUR 5 000 000 for works contracts; and

      2. 10% of the initial contract value for service, and supply contracts, and 15% of the initial contract value for works contracts; and

      3. the net cumulative value of several successive modifications does not exceed the thresholds under points i) and ii) above.

Unlike case (a) and (b), case (c) has no conditions on the content of the modification. The conditions to be fulfilled for this modification are in terms of financial value only.

Where several successive low-value modifications are made, the value is to be assessed on the basis of the net cumulative value of the successive modifications. This provision means that the financial limitations do not apply to the value of each modification, but to the cumulative value of all of the modifications.

Reference to the initial contract value does not take into account price revisions.

For cases under points (a) and (b), as soon as the modification has been signed, a contract modification notice has to be published if the modification:

• is equal to or higher than EUR 300 000 for services and supply contracts;

• or is equal to or higher than EUR 5 000 000 for works.

Contract modification notices are not published for procedures that were not subject to the publication of contract notices, such as specific contracts of a framework contract.

The explanatory note must provide the legal basis of the modifications and demonstrate that the conditions under which a modification are allowed are fulfilled.

In case of lots:

There is one contract per lot, so the modification of the contract takes place per lot and is calculated by taking into account the amount (ceiling) of the relevant lot. If there is one contract covering several lots, the contract should include separate ceilings per lot and the same reasoning per lot applies. If the contract provides only one global ceiling and does not distinguish the lots, the modification applies to the contract as a whole.

In case of framework contracts:

To increase the ceiling of a framework contract, the contracting authority may use either:

• the double de minimis rule (case (c));

• the negotiated procedure for repetition of similar services if all the conditions are fulfilled (see Section 2.11.2.1.).

For framework contracts, the contracting authority may not use the modification of contract linked to additional services (case (a)), because the services to be repeated are not additional services (different than those initially included in the framework contract) but similar services (same as those initially included in the framework contract). Moreover, the contracting authority should not use the modification of contract linked to unforeseeable circumstances (case (b)), in particular where the need for increase of the ceiling results from erroneous initial estimation of the value of the framework contract.

2.11.2.3. Modification through a technical amendment

Technical amendments concern a minor change or a change which does not affect substantial aspects of the contract or the initial procurement procedure, or a change which is part of the economic life of the contractor. Technical amendments can also take place for framework contracts and specific contracts under a framework contract.

A modification through technical amendment can be done on the following basis[145]:

d. where both of the following conditions are fulfilled:

i. the minimum requirements of the initial procurement procedure are not altered;

ii. any ensuing modification of value complies with the double de minimisconditions set out in point (c) of Section 2.11.2.3., unless such modification of value results from the strict application of the procurement documents or contractual provisions.

Most technical amendments take place through administrative orders, except cases of universal succession or change of bank account for which an addendum is required.

Administrative orders

Administrative orders are technical amendments that may take the form of additions, omissions, substitutions, changes in quality, quantity.

Administrative orders have contract-specific conditions which are mentioned in the general conditions. For contract-specific conditions of administrative orders see Sections 3.6. (service contracts), 4.7. (supply contracts) and 5.7. (works contracts). For instance, for works contracts and supply contracts administrative orders may amend the total contract price; while for service contracts, administrative orders cannot modify the total contract price.

The contractor shall be bound the administrative order as if the amendment requested by the administrative order was stated in the contract.

Examples of administrative orders are:

• Change of the contractor’s name;

• Correction of clerical errors;

• Modification of the deadlines or in the frequency for submission of documents, such as reports or interim deliverables but without changing the deadline for performance of the contract which reflects the budgetary commitment conditions;

• Modification of place of delivery due to unforeseen circumstances and as long as this has no financial consequences for none of the contracting parties;

Universal succession

This concerns the total or partial transfer of the contract in cases where by law there is a universal succession of the contractor to another entity (eg. merger, acquisitions, split of the company, etc.).

In case of universal succession, the contracting authority must verify the following conditions:

1. whether the new entity is eligible;

2. whether the new entity is not in an exclusion situation and is not subject to restrictive measures;

3. whether the selection criteria are still fulfilled. For the selection criteria, the principle of proportionality may be used if the contract implementation is already well advanced when the change occurs (e.g. selection criteria which were only necessary for the start phase do not have to be fulfilled anymore at a later stage of the contract).

If these conditions are fulfilled, the transfer cannot be opposed by the contracting authority and shall be formalised by an addendum signed by both contracting parties. Once the contract is signed by the consortium, as a matter of principle there should be no change, except in the cases of universal succession.

However, if a change, including the replacement of a member of the consortium, happens for another reason (exclusion decision), the contracting authority must analyse the consequences of terminating the contract versus accepting the change, and it must in particular assess whether the change is substantial or not (i.e. if it requires to terminate the contract and launch a new procurement procedure or not). If the change is accepted, the same verification as in the case of universal succession must be made.

2.11.2.4. Modification not requiring an amendment

In a limited number of contract-specific cases which are mentioned in the general conditions, modifications do not require an addendum or administrative order. Instead, information is exchanged through notices. The cases are:

• change of address

• change of auditor (in case of service contracts only)

In addition, modifications resulting from the strict application of the procurement documents or contractual provisions do not require an amendment (see exception mentioned under case d) in Section 2.11.2.4.).This type of modification is limited to contract-specific provisions for supply contracts (see Section 4.7.) and works contracts (see Section 5.7.) and is not subject to the financial ceilings listed in cases (a), (b) and (c) (see Section 2.11.2.2. and 2.11.2.3.).

2.11.2.5. Notices not amending the contract

During the implementation of the contract, frequent exchanges between the contractual parties take place that do not amend any contractual provisions. Some of these exchanges include confirmations from the contracting authority to the contractor on aspects related to the implementation of the contract.

Examples of communications not amending the contracts are:

• Following the completion of a report, the confirmation of the date of a seminar to discuss with key stakeholders the results of the report;

• Following discussions with the partner country, the confirmation of the mission dates for a field mission away from the place of performance;

• Confirmation that the expert can work on a public holiday to prepare the logistical details of a conference taking place the next day.

These examples do not require an addendum since they do not amend the contract. Moreover, they do not require and administrative order since they are not one of the contract-specific forms that an administrative order may take, such as additions, omissions, substitutions, changes in quality, quantity.

These communications not amending the contract, are formalised through a notice in the form of a letter or an email registered in Ares.

2.11.3. Extent of modifications for grants[146]

Grant contracts may be amended only by written additional agreements, not by administrative orders. Such additional agreements, including those aiming at adding or removing a beneficiary, must not have the purpose or the effect of making changes to the contract that would call into question the grant award decision or be contrary to the equal treatment of applicants.

When using the standard grant contract, the maximum amount of the grant and the maximum percentage of the European Union contribution must not be increased.

2.11.4. Preparing an addendum

The addendum to the contract shall be prepared as follows:

1) The contracting authority shall draft an addendum using the relevant template for an addendum (Annex b16, Annex c12, Annex d11 and Annex e10).

All references in the proposed addendum to article numbers and/or annexes to be amended must correspond to those in the initial contract.

Any addendum modifying the budget must include a replacement budget showing how the full budget breakdown of the initial contract has been modified by this (and any previous) addendum (see Annex b17, Annex c13, Annex d12 and Annex e3h7).

If the budget is modified by the proposed addendum, the payment schedule must also be modified accordingly, taking into account any payments already made in the course of the contract. The payment schedule must also be modified when the contract is being extended.

Modifications to contract amounts (procurement) may entail changes for the financial guarantees linked to the contract. The new financial guarantee shall be provided by the counterparty when sending the contract signed.

2) Prepare a dossier comprising the following items:

1. an explanatory note (see the model in Annex a6) providing the technical and financial reasons for the modifications in the proposed addendum;

2. a copy of the request for (or agreement to) the proposed modifications;

3. the originals of the proposed addendum, which is based on the standard addendum and includes any revised annexes.

As regards signature please follow the steps described in Section 2.10.3.2.

The addendum takes effect on the date of the last signature.

3) For the following cases the contracting authority will have to publish a notice:

1. a notice for modification of contract, in the cases referred to in Section 2.11.2.2.;

2. an award notice in the cases referred to in Section 2.11.2.1. and 2.6.8.

   For additional information on the publication please refer to publication guidelines in Annex a11e.

2.12. Legal remedies

2.12.1. Complaints to the contracting authority

Without prejudice to other remedies and, in particular, without altering the time-limits for bringing actions set out in paragraphs 2.12.3., where a candidate, tenderer or applicant believes she/he has been adversely affected by an error or irregularity allegedly committed as part of a grant or procurement procedure, or that the procedure was vitiated by any maladministration, she/he may file a complaint to the contracting authority.

Where the European Commission is the contracting authority, the complaint will be sent to the person who took the contested decision, who will endeavour to investigate the complaint and respond within 15 working days. If the candidate, tenderer or applicant is not satisfied with the answer received, she/he may refer to the relevant geographical director in Headquarters. The complaint shall be substantiated and its sole object shall not be to obtain a second evaluation for no reason other than the complainant disagrees with the final award decision.

2.12.2. Complaints to the European Ombudsman

Without prejudice to other remedies and, in particular, without altering the deadlines laid down for the appeals set out in Section 2.12.3., any citizen of the European Union or any natural or legal person residing or having its registered office in a Member State has the right to complain to the Ombudsman for any instance of maladministration by the European Union institutions (Article 228 TFEU). Ombudsman inquiries do not affect time-limits for appeal in legal proceeding.

Article 2(3) of Regulation (EU, Euratom) 2021/1163 of 24 June 2021 states that a complaint to the European Ombudsman shall be lodged within two years of the date on which the facts on which it is based came to the attention of the complainant. Before the complaint is lodged, the complainant shall have exhausted all available Commission administrative remedies.

More information may be found on the website https://www.ombudsman.europa.eu/en/home.

2.12.3. Ordinary actions - litigation

When a candidate, tenderer or applicant believes she/he has been adversely affected by an error or irregularity allegedly committed as part of a selection procedure or procurement, she/he may also bring ordinary actions, provided the conditions are met.

Where the European Commission is the contracting authority, the action must be launched in accordance with the rules set out by the TFEU[147].

Where the European Commission is not the contracting authority, the action must be launched in accordance with the conditions and deadlines fixed by the national legislation of the contracting authority.

The Court of Justice of the European Union has the sole jurisdiction in disputes relating to compensation for damages caused by the European Commission in the case of non-contractual liability[148].

National tribunals are competent in case of contractual liability as set out in the general conditions of the contract.

2.12.4. Amicable settlement, conciliation and arbitration procedures