CIF – Guidelines on best practice for tendering
The contracting departments within the CIF regularly deal with queries from members in respect of pre-qualification and tendering. In response to repeated queries on a number of items, a document entitled Guidelines on Best Practice for Tendering has been developed. This document is based on the provisions set out in the Code of Practice for Tendering & Contractual Matters 2006 in respect of private sector works, and the Capital Works Management Framework Guidance Notes and EU Procurement Directives in respect of public sector works. The guidelines address the issues most commonly encountered by CIF member companies and sets out the rights of contractors in these areas.
All tenders (irrespective of value, complexity, public or private) should include at a minimum a Bill of Quantities. A tender without a BOQ, is a barrier for smaller SME’s to quote for sub-contract packages as they do not have the resources available to prepare a measure for their works. A BOQ is also a very efficient means to keep tendering costs at a minimum. This is a requirement for all private sector works, and will be implemented in the amended Government forms of contract due to be published shortly following the review process.
Private sector works
The rules relating to private sector works are governed by the Code of Practice for Tendering & Contractual Matters 2006, developed by the Liaison Committee. This document addresses matters relating to tender periods, information to be provided to contractors at tender stage, performance bonds and retention.
Public sector works
The rules relating to Public Sector Works are governed by the Guidance Notes to the Capital Works Management Framework, available at www.constructionprocurement.gov.ie and the EU Procurement Directives – Directive 2004/17/EC which relates to utilities, and Directive 2004/18/EC relating to public works. The EU Procurement Directives apply to contracts valued above the EU Threshold, currently set at €5,186,000. The thresholds are reviewed every two years, with the current level due to be revised in January 2016. The EU Procurement Directives have now been amended and the new directives are due to be transposed into Irish law by April 2016.
Guidance notes in relation to public sector tendering will shortly be amended following the publication of the report on the Review of the Performance of the Public Works Contract by the Department of Public Expenditure and Reform and the Office of Government Procurement in December 2014. This report has issued a number of key recommendations which will have a significant impact on public sector projects, including:
- Make the bill of quantities the primary reference document for the pricing of public works tenders for projects designed by the contracting authority
- Introduce a separate tender and subcontract for specialist works contractors
- Require all projects with a value in excess of €2m to be awarded on the basis of Most Economically Advantageous Tender with a significant weighting for quality
- Overhaul the dispute resolution procedure for all public works contracts
The initial changes are expected to be implemented shortly, with further engagement to take place on other items. Members will be updated as amendments are introduced.
Key issues raised by CIF members:
Following on from Circular 10/10, the volume of documentary evidence to be submitted by contractors at tender stage is much reduced. Instead, tenderers are asked to declare that they have the necessary capacity in the required areas and to confirm that they will be in a position to provide the necessary evidence when requested.
- Excessive turnover levels
The turnover levels that can be sought are set out in the Minimum Standards Works Contractor Criteria Guidance Note, which indicates that the turnover level sought on a building project should be 75%-150% of the annualised capital value of the project. For example, a six month building project valued at €1million would have an annualised capital value of €2million, and therefore the turnover level sought should be in the region of €1.5million to €3million. The turnover levels for civil engineering projects should be between 30%-60% of the annualised capital value of the project.
- Restrictive nature of specific requirements
The levels of experience sought by a contracting authority should be reasonable and appropriate to the project in question in relation to both past experience and management/staff. The Government set out in Circular 10/14 and in its predecessor Circular 10/10 that capacity levels set for candidates/tenderers should be relevant and proportionate to the particular circumstances of a contract. Specific guidance is set out in the Minimum Standards Works Contractor Criteria Guidance Note, which states that “minimum standards should not be set at a level that discriminates against certain groups in a particular sector that would be otherwise eligible to do the work”.
- Level of Retention
Retention percentages should be as follows:
PUBLIC: Value of contract Retention
Under €200,000 10%
€200,000 – €3,000,000 Sliding scale 3%-10% pro-rata
Over €3,000,000 3% minimum
PRIVATE: Value of contract Retention
Under €500,000 7.5%
€500,000 – €1,000,000 5%
€1,000,000 – €5,000,000 3%
Over €5,000,000 2%
- Performance Bonds
The current levels of performance bonds for public sector works are set out in
Circular 07/13: Construction Procurement Reform – Reduction of the Current Level of Construction Performance Bonds for use with the Public Works Contracts. Where the contract sum is less than €500,000, a bond should not normally be required. For contract sums up to up to €10m a bond of 12.5% should be required, and a 10% bond for contract sums over €10m. Private sector performance bonds remain at up to 25% depending on the value of the contract.
- Insufficient tender periods
For public sector works valued above the EU Threshold the standard time periods for receipt of tender are 52 days for open procedures and 40 days for a restricted procedure. These timeframes may be reduced where a Prior Information Notice (PIN) has been published, where notice is transmitted electronically, and where unrestricted and full direct access by electronic means is provided to all tender and supplementary documents. For public sector works valued at less than the EU Threshold, the tender period is 21 calendar days. In certain circumstances this time period may be reduced provided the time allowed remains sufficient to ensure genuine competition. There is no provision for additional time to be allowed for tendering a design and build competition.
For private sector works, 20 working days must be provided for tendering.
- Information to be provided to unsuccessful candidates/tenderers
The European Communities (Public Authorities’ Contracts) (Review Procedures) Regulations 2010, Regulation 6 sets out the requirements for notification of unsuccessful candidates or tenderers for projects valued above the EU Threshold. These regulations can be accessed at: www.irishstatutebook.ie/2010/en/si/0130.html
Essentially, the unsuccessful candidate or tenderer must be able to understand the reasons for which he has been unsuccessful.
For below threshold projects, Contracting Authorities are encouraged to constructively debrief unsuccessful tenderers. This is dealt with at section 4.9 of Guidance Note 2.3 Procurement Process for Works Contractors published by the Department of Finance and accessible at www.constructionprocurement.gov.ie/guidance-notes/. Guidance notes relating to the suitability assessment of works contractors in both open and restricted procedures refer to Article 41 of Directive 2004/18/EC, which requires a Contracting Authority to inform candidates of why their submission was rejected within 15 days of a written request.
Services for members
CIF Staff in the contracting departments have specialist expertise in these areas and can offer advice and assistance to members in situations where contracting authorities or private procurers have not complied with the requirements and guidance they should be operating under. Similar issues to those outlined above are dealt with on a regular basis by CIF staff.