Public procurement means the purchasing of works, supplies and services by public bodies at either national or EU level. This includes obtaining and fitting out offices, purchasing IT equipment, commissioning consultancy work or technical assistance, carrying out studies, conducting information and communication campaigns, setting up training courses, purchasing publications, and accessing databases.
Contracting authority
During the application phase and once you are awarded a public contract, you will have a specific contact point within the contracting authority. Your contracting authority may vary depending on how your public contract is managed:
Direct management
When the Commission directly manages procurement contracts, it fills the role of the contracting authority, which means that it is responsible for the entire award procedure, from the publishing of calls for tenders to the award decisions, signing of the procurement contracts, and follow-up on their implementation.
Indirect management
Under indirect management, the Commission entrusts the implementation of the contract to a third party. This can be for example a partner country, an international organisation or a development agency.
In most cases, this designated contracting authority will need to check for the Commission's approval at key steps leading to the awarding of the contract. However, if the Commission assesses that it can trust their rules and procedures, it will limit the supervision to subsequent checks.
Shared management
The Commission shares the management of external action procurement contracts with EU countries. The Commission is always responsible for publishing contract guidelines and award notices.
Shared management is the most common management mode, as national administrations are in charge of spending about 75% of the EU budget. Member States have a choice on how to implement it – either under grants or under procurement, for example.
Rules that are set in the procurement directive apply to the Member States, who are in charge of the whole process; the Commission only does checks and controls.
Types of contract
To provide services, supplies or works to the Commission, both parties (contractor and contracting authority) sign a contract after the standstill period (normally 10 days after all tenderers have been informed of the result).
The contract outlines all services and goods that need to be provided as well as conditions for submission, deadlines and any reporting or reviewing duties to be performed by both parties.
It also defines the different stages for the submission of deliverables (services, supplies or works) and the type of reports that have to be prepared by the contractor.
There are several types of contracts depending on the services, supplies or works provided:
- direct contracts or purchase orders – the goods or services, payments, deadlines, and legal obligations are defined at the beginning. The contract can be implemented without further formalities. These contracts are used for all types of purchases: services, supplies or works.
- framework contracts – these define the services or supplies, the price list, the parties, the legal setup, the duration and the method of making particular purchases. The other necessary elements of the contractual relationship are defined at a later stage in a specific contract. Framework contracts can be used for services and supplies, and are rarely used for works. They do not apply to buildings.
- specific contracts or order forms – these are specific contracts that are part of a framework contract. They usually specify the date and define the specific delivery services, as well as any other terms not defined at framework contract level.
- concession contracts - concession contracts are a specific form of direct contract which allows a contractor to execute works or provide and manage services over a long period of time, in particular when there is a need for return on investment.
- mixed contracts – these contracts combine works and/or supplies and/or services; they can also combine procurement and concessions. For example, a service concession would cover the cafeterias and canteens, vending machines or press shop within an institution building.
- building contracts - these contracts cover the purchase, exchange, long lease, usufruct, leasing, rental or hire purchase, with or without option to buy, of land, buildings or other real estate.
Payment and progress reports
Depending on the nature of services, works or supplies provided, the contract defines specific deadlines for each payment.
In some cases, contractors may need to submit progress reports together with their invoices. These reports show what has been done so far to justify payment, including identifying all deliverables provided, any issues encountered, delays, etc.
Amendment or modification of contract
During the term of a contract, there may be situations where the parties agree to modify one or several clauses of the contract. In general, an amendment does not modify substantially the conditions of the initial procurement procedure.
There are 3 types of amendments, depending on whether or not a procurement procedure or publication of an award notice is necessary:
- technical amendment - involves a minor change or a change which does not affect substantial aspects of the contract
- amendment with procedure - involves a substantial change to the contract which requires a negotiated procedure without prior publication of a contract notice
- modification of contract - this is a change to the contract which does not require a procurement procedure, but is subject to publication of a modification notice or publication online
Mid-term review and benchmarking
Most framework contracts define rules for benchmarking and mid-term reviews.
The benchmarking system obliges the contractor to revise its financial offer regularly to keep the prices and technological quality of the goods delivered in line with current market conditions.
If needed, the contract also defines and sets the timeframe for mid-term reviews to assess what has been done and if the relation between the contract prices and market prices is still in line.
Ownership of results
At the end of the contract, if not specified otherwise, the contracting authority becomes the owner of the results. Specific contractual clauses regulate the intellectual property rights.