1 Rome, December 13th 2004

Working Group on Auction Design and Competitive Issues

Rome, December 13th 2004

Matteo Zanza, Consip

2 Rome, December 13th 2004

Agenda

Final Report already presented in Stockholm

31 Institutions 19 sent back the Questionnaire

Some deeper information and new points:

1. Governance of Institutions

2. Analysis of Purchased Value over Total Public Procurement

3. Online Auctions

4. Abnormally Low Offers

3 Rome, December 13th 2004

Institutions classified

Governance Organisation Institutions

Large AdministrationsESPA (Romania)

French Ministry of Economy, Finance and Industry Administration of State Material Reserves (Czech Republic)

Greek Ministry of Development

Central Purchasing Bodies

ABA (Belgium) BBG (Austria)

BESCHA (Germany)Consip (Italy)

Malta Department of ContractSKI A/S (Denmark)

OGC (UK)Statskontoret (Sweden)

Authorities

Hungarian Council for Public ProcurementIrish Department of Finance

Polish Public Procurement OfficeSlovakian Office of Commissioner for Access to Public

Information Slovenian Office for Public Procurement

MINHAC (Spain)Public Procurement Directorate of Cyprus

Turkish Public Procurement Authority

4 Rome, December 13th 2004

Purchased Value as percentage of Total Public Procurement

To compare different Purchasing Bodies on the basis of their activity

SKI A/S(Denmark) (Sweden)(Germany)(Austria) (Belgium) (Italy) (UK)

Fonts:

GDP: Eurostat;

Total Public Procurement as % of GDP: EU Report 2004;

Purchased Value: Questionnaires

Purchased Value as Percentage of Total Public Procurement

1,02%

0,04%

1,56%

0,12%

1,27%

1,83%

0,85%

BBG ABA SKI A/S (Denmark) BESCHA Consip Statskontoret OGCbuy.solution

5 Rome, December 13th 2004

Online Auctions

7 institutions applied this procedure

Three different formats have been applied

1. Sealed Bid auction

2. Descending auction (reverse auction)

3. Multiple round descending auction

Below or above thresholds?

5 Institutions performed them both below or above the thresholds

Useful tool to improve the procurement performances

6 Rome, December 13th 2004

The contracting authority shall be obliged to invite the tenderer to explain his price quotation.

Abnormally Low Tender 1/2

Article 51 of the 2004 EU Directive states that “If, for a given contract, tenders appear to be abnormally low in relation to the goods, works or services, the contracting authority shall, before it may reject those tenders, request in writing details of the constituent elements of the tender which it considers relevant”. The Directive defines then which details should be taken into account by the contracting authority.

If the firm is not able to justify its offer the latter is considered abnormally low and so rejected.

When a tender presents an abnormally low price compared to others tenders, market prices or institution own costs estimation.

7 Rome, December 13th 2004

BESCHA, Consip and the Turkish Public Procurement Authority follow three different additional criteria to identify those firms that have to motivate their offer.

Abnormally Low Tender 2/2

Consip If the offer presents a discount lower than 20% of the arithmetical mean of the all discounts considered valid.

Turkish Public Procurement Authority(work contracts)

BESCHA If the offer presents more than 20% deviation from the second best price.

If the offer is below of a defined Boundary value obtained multiplying a certain value “K” by the “Estimated cost” of the contract. To have the “K” value, the contracting authority has to calculate the ratio between the arithmetical mean of the tenders (tenders 120% above or 40% below of the “estimated cost” are not taken into account) and the “Estimated cost”. To any value of this ratio between 1.2 and 0.4 there is a correspondent “K” value.

8 Rome, December 13th 2004

9 Rome, December 13th 2004

Turkish Formula

Tenders which are over 120% and under 40% of estimated cost are not taken into concentration while calculating the means of the tenders.

1. By dividing the mean by estimated cost the value “C” is obtained2. By using the table below, “K” is obtained3. By multiplying the “K” by estimated value, we obtain the boundary value

AT = The arithmetic mean of valid tendersEC = Estimated cost calculated by the contracting entity C = AT /ECBoundary Value = K*EC

C=AT/EC K

1,20 0,800

1,00 0,800

0,90 0,766

0,80 0,723

0,70 0,671

0,60 0,610

0,50 0,538

0,40 0,454

10 Rome, December 13th 2004

Domestic GDP

2003 GDP

0

500.000

1.000.000

1.500.000

2.000.000

2.500.000

BBG ABA SKI A/S (Denmark) BESCHA Min. of Dev.(Greece)

Consip Statskontoret OGCbuy.solution

Austria Belgium Denmark Germany Grecia Italy Sw eden UK

Mill

ion

of

Eu

ro

11 Rome, December 13th 2004

Total Public Procurement

2002 Total Public Procurement

0

50.000

100.000

150.000

200.000

250.000

300.000

350.000

400.000

Austria Belgium Denmark Germany Grecia Italy Sweden UK

I.e. Purchasing of goods, services and works by governments

12 Rome, December 13th 2004

Purchased Value

2003 Purchsed Value

0

500

1.000

1.500

2.000

2.500

3.000

BBG ABA SKI A/S(Denmark)

BESCHA Min. of Dev.(Greece)

Consip Statskontoret OGCbuy.solution

Mill

ion

of E

uro