Procurement Training Module Price Enquiries 50 k CHF

Procurement Training Module Price Enquiries >50 k. CHF http: //procurement. web. cern. ch/ C. Carayon, on behalf of the Procurement Service 25 March 2021

Some housekeeping Active participation Flight mode Open mind

Training layout Price Enquiries >50 k. CHF • • Part 1: Procurement Rules Part 2: Procurement Strategy Part 3: Price Enquiry • Technical Specification • Common errors • Other important aspects Part 4: Legal Aspects / Contract follow-up

Part 1: The Procurement rules

Price Enquiries - PE (50 – 200 k. CHF)

Adjudication: lowest compliant bid Technical Financial Delivery * *If amount >100 k. CHF, alignment rule may apply

Poorly balanced Member States (Supplies) (1 st March 2021 – 28 February 2022, based on the previous 4 calendar years) Well Balanced Poorly Balanced Very Poorly Balanced Austria Bulgaria Czech Republic France Hungary Italy Romania Netherlands Slovakia Switzerland Belgium Croatia* Cyprus* Denmark Finland Germany Greece Lithuania* Pakistan* Poland Portugal Serbia* Slovenia* Spain Sweden Turkey* Ukraine* Estonia* India* Israel Norway United Kingdom * Associate Member State or Associate Member State in prestage of membership

List of firms • Reflects the relevant market, complexity of the A consistent product, etc. list • Ensures competition, ie low prices • Reduces questions/problems from Member States • Focus on poorly and very poorly balanced Member Requirements States in priority; • Well distributed among Member States.

Limited tendering « Limited tendering is foreseen by the CERN Procurement Rules to improve the industrial return of very poorly balanced Member States. » Conditions • Firms established in very poorly balanced Member States only (industrial return <0. 4); • Used in case where there is sufficient competition; • ILO can ask to add firms, provided they are established in very poorly Member States.

Confidentiality / communication Confidentiality Communication • Keep any information on the procurement procedure strictly confidential ! • During the tendering process, any communication from bidders shall be directed to the procurement service. Any communication from CERN shall be made by procurement service (including technical clarifications). •

The technical officer (TO) 1 Defines the procurement need and contacts the procurement officer Drafts the technical specification and all technical documents, in accordance with templates available 2 3 Proposes potential bidders to consult within the Member States In collaboration with PS, carries out the procurement process in accordance with the Procurement Rules 4 5 Prepares the DAI Performs the technical follow of the contract, including follow of the design and manufacture of supplies 6 7 8 In collaboration with PS, ensures that the contractual terms of the order are fulfilled Checks, accepts or rejects the delivery of supplies 9 Evaluates the supplier (automatic questionnaire)

Part 2: The Procurement Strategy

Quiz

Check list ü Defining requirements ü Inputs and outputs ü Make or buy ü Price estimate ü Sourcing suppliers ü Availability of key staff ü… Are you ready?

Influencing factors Stakeholders Risks Demand Objectives Non-cost factors Supply market Cost

Defining the scope of supply Intellectual property Additional quantities Maintenan ce service Documents Transport Design Installation Prototype Spare parts Software Commissio ning Pre-series Training Series Packaging

Defining the contract type Firm commitment Framework contract Quantities Fixed Estimated Deliveries Fixed, based on project needs Fluctuating Based on release orders Expiry End of project Expiry date (or budget ceilling reached) • Are you the only requestor? • What about other departments or experiments?

Market Knowledge • • Key • questions • • • How many suppliers? Size? How do they compete ? Barriers? Trends? Changes in technology? Do standard products exist? Any substitute? How big and attractive is CERN? …

Group of firms and subcontracting • • Ask yourself: what cannot be subcontracted? The industry knows better how to organise Do not put unnecessary restrictions By default, groups of firms are allowed General Conditions of CERN Contracts: Group of firms: ”[…] a consortium, joint venture or any other arrangement concluded between legal entities for the joint execution of the Contract […] Each member shall be jointly and severally liable for the performance of the Contract. ” Subcontracting: […] any arrangement whereby the Contractor contracts with another legal entity (the subcontractor) […] for the delivery of a major part of the Supplies […]

Splitting Advantages • Timely supply for big quantities (if a single contractor cannot fulfill the entire need) • • Risk mitigation for complex supplies Better distribution among Member States a a a Drawbacks • Increased follow-up • Higher cost • Potential compatibility issues between the two supplies Foresee additional purchase options

Risks levels and risk types • Low risk: standard / off-the shelf products. • Medium risk: non-standard products which can be produced with existing manufacturing techniques and/or technologies, but industry has no experience. • High risk: new high-tech products requiring a conceptual design phase. The manufacturing methodology has to be developed. Technical Schedule Financial Contractual Organisational Safety Regulatory Is CERN in a better position to carry (part of) the risks?

Conclusion Think well ahead of the tendering procedure Think out of the box when defining the scope Challenge your preconception of the strategy Adopt a risk-based approach and mitigate risks in the PE Ask advice to the procurement service

Limited tendering « Limited tendering is foreseen by the CERN Procurement Rules to improve the industrial return of very poorly balanced Member States. » Conditions Part 3: Price Enquiry • Firms established in very poorly balanced Member States only (industrial return <0. 4); • Used in case where there is sufficient competition; • ILO can ask to add firms, provided they are established in very poorly Member States.

Quiz

Objectives and key points • Objectives • • • Key points Meet the technical, delivery and performance requirements, At the lowest possible overall cost, Achieving balanced industrial return for Member States and Respecting CERN Procurement Rules. • Follow the plan: the documentation implements and reflects the agreed procurement strategy • Think ahead: most of the documentation you produce will be part of your future contract(s) • Start with the templates, but adapt them to your strategy Procurement templates

PE documentation package Document Purpose By Technical Specification + annexes Specifies all of the technical and operational requirements that the bid/contractor must comply with (including Technical Officer Technical Questionnaire (optional) Used to request information to help you assess the conformity of the bids Technical Officer Tender Form 1. Procurement Officer 2. Specifies the specific commercial and legal requirements and conditions (e. g. penalties, bank guarantee) Pricing, adjudication basis and options General Conditions of CERN Contracts The standard/boilerplate contractual conditions used for CERN contracts Procurement Officer General Conditions of ITs The standard/boilerplate conditions used for tendering procedures Procurement Officer Selection and Adjudication criteria The standard conditions used to adjudicate contracts Procurement Officer Cover Letter Introduction about the IT / PE and submission process to follow Procurement Officer

Additional documents (not sent) Document Purpose By List of firms Identifies the firms to be invited to the Price Enquiry, with all contact details Technical Officer (preliminary) Procurement Officer (final) 4 P statistics Provides the statistics to justify the memo Technical Officer 4 P memo Define the applicable labour law for activities on the CERN site (only applicable in case activities are performed both in FR and CH) Procurement Officer

Limited tendering « Limited tendering is foreseen by the CERN Procurement Rules to improve the industrial return of very poorly balanced Member States. » • Firms established in very poorly balanced Member States only (industrial return <0. 4); • Used in case where there is sufficient competition; • ILO can ask to add firms, provided they are established in very poorly Member States. The Technical Specification Conditions

Where, Why 1. INTRODUCTION What 2. SCOPE OF THE SUPPLY 3. SPECIFICATION OF THE TECHNICAL DELIVERABLES 4. SPECIFICATION OF THE ACTIVITIES 5. SPECIFICATION OF THE DOCUMENTATION How, When 6. APPLICABLES RULES, NORMS AND STANDARDS 7. PERFORMANCE OF THE CONTRACT Who 8. CERN REPRESENTATIVES 9. ANNEXES

Ugliness is hard to sell

Simplicity Key points • Sentences short and simple • The main reader is a technical person Not trying for the Pulitzer Prize!

«Shall» vs. «Will» • DOs DON’Ts • “Shall” and “Must” are used to express a binding requirement “Will” is used to express a declaration of purpose • “Should”, “May” • • • “The contractor shall…” “The supply must…” “CERN will…”

Active voice VS. Avoid ambiguity, use active voice.

Slash Mark «/» Dictionary “An oblique stroke used between two words to show that the appropriate one may be chosen to complete the sense of the text. ” Is it to the contractor to get to decide which word is proper?

Typing rules (coherency) Key points DOs • • Same rules throughout the TS Same font throughout the TS Avoid using uppercase Maximum three levels of headings is highly preferred DON’Ts 150 k. N 150 KN Nonbreakable space Right SI unit 100 × 200 mm 2 Math symbol 100 x 200 mm No “x” letter

Number and price typing rules DOs … one two three … nine ten then 11 12 13 … … 300 CHF 500 k. CHF 2 MCHF … DON’Ts … twenty thousand Swiss francs …

Limited tendering « Limited tendering is foreseen by the CERN Procurement Rules to improve the industrial return of very poorly balanced Member States. » Conditions • Firms established in very poorly balanced Member States only (industrial return <0. 4); • Used in case where there is sufficient competition; • ILO can ask to add firms, provided they are established in very poorly Member States. Common errors

Quiz

Common errors: over-specifying High/good quality products/services “Good enough” Low/affordable cost products/services

Common errors: over-specifying Key points • Over-specifying (or “gold-plating”) is a major cause of cost overruns and delays • Before writing it, ask “why is it needed? ” • Be aware of being over-stringent and demanding more than companies are used to • Allow for tolerances (e. g. object height = 1000 mm +/10 mm) • Don’t reference norms and standards “just in case”

Common errors: over-specifying “The Supply shall comply with the CERN Safety Rules” Not all rules apply, be specific Procurement Supplies — Technical Specification Writing 41

Common errors: reinventing the wheel • Where possible, use industry standard items and technologies • Where possible, if CERN standard items and technologies exist, use them

Common errors: ambiguity Key points • Ask yourself: “will all readers interpret this in the same way? ” • Nothing goes without saying • Avoid “approximately”, “around”, • Be careful of “must be agreed with CERN” • Be careful of “should” vs. “shall”

Common errors: ambiguity Example: “The building must provide sleeping space for up to twenty guests, provide lots of natural light, be surrounded by green space, be made of attractive materials, and should include a swimming pool. ”

Common errors: testing Disputes often happen after the supply is delivered: • The contractor wants to be paid • CERN wants to check the conformity of the supply Provide detailed specifications about the acceptance tests, the acceptance criteria, and the process (including approximate timescales, if it’s going to be > 3 months)

Common errors: total cost of ownership Consider the TCO & the full life cycle of the future contract

Miscellaneous • Transparency: • Clear requirements and acceptance criteria • Clear adjudication basis Key points • Avoid distortions of competition: • Do not draft specifications tailored to a single firm’s technology • Avoid logos and names on drawings • Avoid specifying subcontractors

Checklist Before starting writing, devise a strategy together with the procurement officer. Do not reinvent the wheel, use templates. Key principles: transparency, impartiality and fair competition. (Specify a need, not an offer). Consider total cost of ownership. (Power consumption, installation and maintenance cost, etc. ). Target “good-enough” quality, do not over specify. Look for standard products, if possible. Following the writing guide. Short and simple sentences.

Limited tendering « Limited tendering is foreseen by the CERN Procurement Rules to improve the industrial return of very poorly balanced Member States. » • Firms established in very poorly balanced Member States only (industrial return <0. 4); • Used in case where there is sufficient competition; • ILO can ask to add firms, provided they are established in very poorly Member States. Other important aspects Conditions

Staggered deliveries Multiple deliveries • • Deliveries with batches? • Define the minimum / maximum size of a batch • Define the periodicity (average per quarter vs. fixed quantities per week / month) • Is my acceptance test protocol adapted ? • Can we adsorb all deliveries over time? • Sample testing vs. systematic testing? Adapt the technical specification accordingly Reflect these requirements in the delivery schedule Try to set sufficiently flexible requirements to meet vendors’ varying throughput capabilities

Material made available by CERN Key points • • Formal incoming inspection ? Handover certificate needed ? Insurance coverage? Who is in charge of maintenance ? Specific storage requirements ? Minimum surface needed for storage ? What are the minimum levels required to ensure the production throughput? • Make sure that: • The procurement of material is made in advance • There is no disruption in deliveries • An inventory is set up and maintained

Supply involving software Usually, CERN does not own the software, it pays for a license of use. The licence terms are central and dictate the price. Key points • Quantity: per user, per server, per site ? • Time limit: perpetual vs annual subscription? • Use: research only? KT? Open hardware repository? Other? • Geographic restrictions: Meyrin, Prevessin or both? Home use? Use in external institutes? • Maintenance (bug-fixing, upgrades): included?

Supply involving software Beware • Always have an exit strategy and avoid dependency • Price reductions range from 0 – 100% ! • License conditions are NOT covered by CERN’s General Conditions of Contracts – include requirements in the tendering documents • Data privacy issues, especially for cloud licences – anticipate lengthy discussions

Activities at CERN Key points • “Working on the CERN Site” applies • Registration and accesses: it takes time! • VAT: separate invoices needed: • FR: invoice incl. French VAT in EUR; • CH: invoice without Swiss VAT • Subcontractors must be registered under the contract • Safety coordination (PP, VICs, etc. ) RACI MATRIX WEB PAGE

Activities at CERN • Definition: For services performed in FR and CH, one labour law applicable by the contractor to its personnel. • The applicable law (AL) is determined on the basis of the “Part Prépondérante Prévisible de la Prestation” = 4 P 4 P Regime Areas concerned: rest time & leave the minimum wage hygiene, safety and health at work protection for young workers and pregnant women or have just given birth • equal treatment • temporary work • •

Part 4: Legal Aspects – Contract follow-up

The standard (contractual) model GENERAL TERMS (General Conditions of CERN Contracts - GCCC) SPECIFIC CLAUSES (Tender form, technical specification, clarifications, etc. ) PURCHASE ORDER (CONTRACT)

Priority between documents High PO terms Delivery schedule Clarifications Tech. spec. & annexes Price Enquiry, excl. spec. & clarifications GCCC Low Contractor’s bid • All relevant documents must be listed • Hierarchy must be established • Contractors’ terms must be excluded

Utility of the GCCC Set the frame conditions for standard situations Pre-approved, autonomous language (EN and FR) Reflect CERN’s long experience in procurement Cover supplies as well as services Protect CERN from suppliers’ standard conditions of sale Application • Applicable by default • Referred to in purchase orders and contracts • To be complemented or modified by specific clauses

Key legal considerations

Delivery Key points • Must be as set out in the contract • Is the responsibility of the Contractor (as per incoterm) • The supply must be in good shape. In case of issue: • Take pictures • Inform the Contractor and make reservations forthwith, with Procurement and Reception service in cc • Receipt ≠ acceptance • Beware: modifications of the planning by CERN may lead to compensation A delay may be acknowledged and not be accepted ( = still subject to penalties)

Acceptance procedure CERN recognizes that delivery is correct via: • Written notification of acceptance within 3 months • Payment in full within 3 months Beware • Acceptance triggers payment • Acceptance is granted if no action for 3 months • Check thoroughly that the supply complies with technical requirements • If needed, contact the Procurement service and negotiate an extension of the acceptance period

Warranty Duration Key points • 2 years by default, starting from acceptance • Can be adapted to your needs • Remedy of existing NCs by Contractor after acceptance by CERN • Also applies to supplies likely to suffer same NCs • If the Contractor fails to remedy: measures by CERN or 3 rd party at Contractor’s expense • Extension or renewal of warranty

Termination By Why CERN or the contractor • Breach not remedied timely (subject to a prior letter of notice) • Gross negligence or willful misconduct • Bankruptcy insolvency • Convenience (beware of financial and legal consequences)

Contractual toolbox No acceptance Penalties Ex: -Late delivery -Failure to deliver Ex: -Non-conforming supplies Execution by 3 rd party Ex: -Failure to deliver or late delivery (wedding cake clause – if mentioned in the PE) -Other breaches (partial delivery, etc. ) Be proportionate Termination / Draw on bank guarantee (if any) Ex: -Non-conforming supply after attempt to remedy -Problems with Warranty

For any contractual issue Key points • Systematically inform Procurement before taking any decision • Together: assess the situation, discuss the options and decide what to do • Procurement will handle formal communication (letter of notice, termination, amendment*, etc. ) *To formalize a contractual change agreed between the Parties, activate options, etc.

Confidentiality “Any information related to the Contract that has been identified as confidential or that can reasonably be understood to be confidential” Definition Examples: • • Technological data (eg. specific know how, patents, licenses, etc. ) Commercial data (prices, contractual terms, results of the IT, etc. ) Personal data Etc. Mark sensitive data as ‘confidential’ Organise yourself so that confidentiality is maintained Disclose information on a ‘need-to-know’ basis only Ask the Procurement Service in case of doubt

Intellectual property (IP) General Conditions of CERN Contracts: Software Drawings Inventions Designs Reports Documents Protocols Know how Processes Etc. “[… ] Any Intellectual Property generated in the performance of the Contract shall be vested exclusively in CERN […]” + • CERN discloses IP to Contractor • License for CERN to use Contractor’s IP for the purpose of the contract • CERN may grant a license for contractor to use CERN IP (subject to separate agreement) *Reasonable modifications may be negotiated, ask Procurement and KT (Myriam Ayass)

Quiz

Contract Follow-up

When to start? Technical details are discussed during the clarification phase • • Planning established Equipment to be used defined Raw material to be purchased Etc.

Why?

Contract follow-up Best practices

Kick-off meeting (KOM) 1 Nominate CERN’s and contractor’s contacts Review the main aspects of the supply scope, technical requirements, schedule, acceptance tests, maintenance, etc. ) and make sure there is no ambiguity in the interpretation of the contract 2 3 4 Set the mechanism for follow-up meetings, periodicity, reporting and participants Define actions and set deadlines 5 Draft minutes

Follow up meetings Participants • • Technical officer Contractor’s contract manager Procurement service, if needed (required for KOM) Technical or Procurement Management, if needed (required for KOM) Agenda • • Ongoing activities Schedule Awareness points etc. • • TO drafts Procurement reviews Contractor approves If no comment within 8 days, minutes are approved Minutes

Communication The procurement officer will… Draft correspondence with contractual consequences i. e. : application of penalties, notice + request for remedial measures, non acceptance of supplies, drawing on bank guarantees, termination of contract Draft amendments Interact with the Legal Service and other services (invoice office), if necessary

Behavioural tips (1) 1 2 Comply with CERN’s Integrity Policy, including CERN’s Code of Conduct Defend CERN’ interests 3 4 Read, understand acquire full knowledge of your contract Use templates wherever they exist (communication templates, minutes) 5 Clearly define the roles and responsibilities of CERN personnel in charge of the follow-up of the contract

Behavioural tips (2) 6 Set the relationship with the contractor up for success Show the example: be prompt, stick to the time frames, be meticulous with paperwork Be fair and impartial Be constructive and pragmatic Distinguish facts and opinions Trust and verify

Behavioural tips (3) 7 Be respected, but not feared, by the contractor Do not negotiate on your own, inform procurement service as soon as any dispute arises 8 9 10 11 12 13 Expect and manage change Learn and share Protect ‘commercial-in-confidence’ information Be aware of the evolution of applicable law, rules and regulations Contact the procurement officer for any question related to contractual and commercial matters

Use of CERN images, logos and names General Conditions of CERN Contracts: “The Contractor shall not use […] any images depicting or belonging to CERN […] or any of the names under which CERN is known without prior written permission […]” Request - Contractor Approval* - Technical Officer + Press office + Procurement service + Legal service Communication - Technical Officer or Press office or Procurement service *Conditions: acceptance of proposed content + supplier has proved to be reputable + no additional objection

Gift policy You should neither offer nor accept gifts, favours or hospitality. This applies equally to your family and friends, as well as any individual or organisation with which you are directly or indirectly connected. Examples include: 1 2 cash gifts of any amount; a special entitlement given for private use; 3 travel and/or accommodation paid directly or indirectly; recurrent invitations for meals or even a single invitation for a meal that could be perceived as excessive or unreasonable; 4 5 6 invitations to sporting, cultural or social events; recruitment of a family member as a personal favour; 7 any items, including advertising and promotional items, the market value of which typically exceeds 30 CHF.

Conclusion Strategy definition Early consultations Correspondence Advice Disputes Negotiations Any other question…. Contact us !

Thank you !

Preparing a DAI

Preparing a DAI Webinar: https: //procurement. web. cern. ch/en/elearning Search function Do it “right the first time” to avoid workarounds / delays and ensure accurate records: • Attach all required documents (bids, emails, single source memo, etc. ). • Right framework contract (if any) • Right DR (for contracts >50 k. CHF only) • Right supplier (check the address, right contact email), • Right packaging / transport conditions.

Preparing a DAI https: //procurement. web. cern. ch/en/elearning Use one language Meaningful description: avoid generic words (software, license, etc. ), acronyms, internal references • Should not be a repetition of short description • Clear and comprehensive description • Select the right procurement code to allow accuracy of statistics and future supplier idenfitication Indicate: • delivery date or, • lead-time in number of weeks or months

Preparing a DAI Does not appear in the order (but stays in the file!) Addition technical information, if necessary. Or leave blank. If >20 k. CHF, evaluation of the supply is required