Project Cycle Management Manual

3. Award of Projects

3. Award of Projects
3.1 Differences Between the two Models for Awarding Projects
3.2 Award of Projects by Application
3.3 Award of Projects by Tender
3.3.1 Rules and Procedures for Award of Contracts
3.3.2 Standard Contract Forms
3.3.3 Eligibility
3.3.4 DEPA's Manual for Tendering and Contracting

3. Award of Projects

3.1 Differences Between the two Models for Awarding Projects

Awarding Projects
As mentioned in Chapter 2, projects by applications are initiated by the project holder, whereas projects by tender are initiated by DEPA.

Legal differences
From a legal point of view, the two methods differ in particular with respect to the responsibility for the project document.

Tendered projects
Since DEPA has prepared the project document in a project by tender, the responsibility for the project document rests with DEPA, and the project holder is responsible only for implementing the project in accordance with the duty of care.

Projects by application
In projects by application, the project holder is not only responsible for implementing the project, but he is also responsible for preparing the project document. This responsibility entails inter alia that the project document is founded on adequately detailed and thorough investigations and surveys of facts and circumstances surrounding the project and that the design of the project is feasible. DEPA requires the project document to be in accordance with the best professional practice. The fact that DEPA has assessed the application before a grant is awarded does not limit the responsibility of the project holder.

Advance payment
There is also a difference between the two project types with respect to advance payments made to the project holder.

In projects by application, advance payments are in general available only to NGOs, and advance payments are available to other project holders only in connection with the procurement of supplies or works.

In projects by tender, advance payments are available to all project holders.

3.2 Award of Projects by Application

As mentioned in Section 2.4, DANCEE and MoE assess the project application on the basis of the criteria for DANCEE support and the national programmes and priorities. After the assessment, DANCEE may approve the application and award the project to the project holder by way of a grant.

Letter of grant
The rules of procedure for the award of contracts do not apply to the award of projects by application. Instead of a contract, a letter of grant is issued, within which terms and conditions are specified.

Statistical summary and data sheet
A statistical summary (and instructions for filling in this summary) and a data sheet are attached to the letter of grant. The data sheet must be filled in and submitted to DANCEE within four weeks of the receipt of the letter of grant.

The statistical summary must be filled in at the end of the project and submitted to DANCEE - please refer to Section 4.3.8.

3.3 Award of Projects by Tender

A project by tender is initiated by DANCEE in cooperation with MoE, and DANCEE awards the project to a project holder in accordance with DEPA's rules of procedure for award of contracts.

Standard contract form
The project is awarded by way of a contract, and DANCEE uses DEPA standard contract forms.

Statistical summary and data sheet
A statistical summary (and instructions for filling in this summary) and a data sheet are attached to the contract. The data sheet must be filled in and submitted to DANCEE within four weeks of the receipt of the contract.

The statistical summary must be filled in at the end of the project and submitted to DANCEE - please refer to Section 4.3.8.

The purpose of this section is to provide an overview of DEPA's rules of procedure for the award of contracts and the standard contract forms used by DEPA. For a more comprehensive description of these tender and contract issues, see DEPA's separate Manual for Tendering and Contracting, also mentioned in Section 3.3.4.

3.3.1 Rules and Procedures for Award of Contracts

Governing rules and regulations
Normally, DEPA awards contracts under the DANCEE in pursuance of an international agreement between DEPA and a partner country which is not a member of the EU.

In such situations, the EU directives on public service contracts (92/50/EEC) and public supply contracts (93/36/EEC) do not apply to the award. Hence, DEPA's award of contracts under the DANCEE programme is normally governed only by national rules. In this manual, procedures for award of contracts and thresholds for award procedures are based on national rules.

Project holders
DEPA requires the project holders to follow these rules of procedure when undertaking procurement as part of the services paid for by DANCEE funds.

Negotiated procedure
In a negotiated procedure without publication of notice, DEPA selects a smaller number of companies and invites each of them to submit a tender. DEPA may, prior to invitation, call for expressions of interest from companies.

Open procedure
In an open procedure with publication of notice, DEPA advertises the contract by publication of notice in which DEPA invites all interested companies to submit tenders.

Restricted procedure
In a restricted procedure with publication of notice, DEPA advertises the contract by publication of a notice in which DEPA invites requests for participation in the tender pre-qualification. Based upon a set of selection criteria, DEPA then selects a few companies to submit tenders. Only the prequalified companies are invited to submit tenders.

In all award procedures involving more than one tender, the contract is awarded after an evaluation of the tenders on the basis of the award criteria that are included in the tender documents issued by DEPA to the tenders.

Award procedure
In every award, DEPA will follow the award procedure which, in consideration of the particular circumstances, ensures the most economic and efficient outcome. Publication of notice is always required, if the value of the contract is estimated to equal or exceed the thresholds specified below under Thresholds for Award Procedures.

When a contract is awarded by a procedure with publication of notice, DEPA will normally follow the restricted procedure. DEPA will only follow the open procedure in particular cases where DEPA expects to receive only a small number of tenders due to the nature of the services or the supply and/or where DEPA wishes to save the time required for a pre-qualification.

The thresholds for the different types of contract are specified in Table 3.1.

Table 3.1:

1. The value of a service contract includes fees only and not reimbursable expenses or the value of supplies or works to be procured by a project holder as part of the services or which are arranged by other parties.
   
2. For purposes of the threshold, the term "supply contract" covers not only contracts for the delivery of goods but also contracts for the delivery and installation of goods. Particular requirements apply to the number of bids to be solicited before the award of a supply contract without publication of notice.
   
3. For purposes of the threshold, the term "mixed contract" means a contract with one company for a combination of services, supplies and /or works. The threshold for mixed contracts only applies if the values of the separate components of the contract do not exceed their individual thresholds. A contract providing for the procurement of supplies and/or works as part of the services is not a mixed contract as the project holder will not be the supplier or contractor.

No division of a contract
No contract shall be divided with the intent of reducing the value of the resulting contract(s) below these thresholds with the purpose of circumventing the rules.

Exemptions
DEPA may award a contract without publication of notice irrespective of the value of the contract by an exemption from the rules of procedure.

An exemption, however, shall be justified by particular circumstances, including reasons of extreme urgency or technical reasons for which the services or supplies may be provided or delivered only by a particular person or company. Further, an exemption requires the approval of DEPA's management.

3.3.2 Standard Contract Forms

In projects by tender DEPA will normally use standard contract forms.

The standard contract forms most frequently used by DEPA are the KR-contract form and the FIDIC contract forms.

KR-contract form
The KR-contract form is used for short term agreements on consultancy services. KR is an abbreviation of the Danish term "Korttidsrådgivning" which translates into "short term consultancy services".

The KR-contract is governed by rules and guidelines for short-term agreements on supply of consultancy services (the KR-rules).

The KR-rules is an agreed document on which the Danish Ministry of Foreign Affairs and DEPA for the one part and the Danish Association of Consulting Engineers ("F.R.I.") and other professional associations for the second part are in agreement.

The KR-rules only apply to service providers who are members of the associations which are party to the agreement on the KR-rules.

For practical reasons, DEPA may use the KR-contract form when contracting services from a service provider who is not a member of the above associations, but in that case DEPA reserves the right to deviate from the KR-rules.

FIDIC contract forms
"FIDIC" is the International Federation of Consulting Engineers.

FIDIC has published various contract forms[3] , and where applicable, DEPA normally uses the FIDIC contract forms.

DEPA will use the particular FIDIC contract form which is the most appropriate in consideration of the nature of the contract. However, the White FIDIC (see footnote) is only used when the KR-contract form cannot be used.

Other contract forms
For the procurement of supplies, DEPA may use various contract forms which include World Bank and EU tendering and contract forms.

3.3.3 Eligibility

General eligibility
In general, all persons and companies are eligible for the award of a contract by DEPA, and only a few restrictions apply.

The only general restriction on the eligibility is that DEPA will exclude from the award procedures any person or company who has unfulfilled obligations relating to the payment of taxes in excess of DKK 100,000. Reference is made to the Danish act on restrictions on debtors' eligibility to participate in public tender procedures (Act no. 1093 of 21 December 1984).

Particular eligibility
To be eligible for the award of a particular contract, a person or company must comply with the necessary legal, technical and financial requirements and must have the capability and adequacy of resources to provide the particular deliverables effectively. In a negotiated procedure without publication and a restricted procedure with publication of notice, only the tenders selected or prequalified by DEPA are eligible to submit tenders.

Rules of equality of treatment of the tenders in a tender procedure exclude from participation any person or company who has an unfair competitive advantage.

An unfair competitive advantage may be gained from participation in the project phases preceding the tender. However, only previous participation which DEPA considers to result in an unfair competitive advantage will cause exclusion from tendering. In these decisions, DEPA follows the guidelines on the principle of the equality of treatment issued by the Danish Competition Agency (KonkurrenceStyrelsen).

On request, DEPA may render an advance opinion on the particular eligibility of a person or company before a tender procedure. Although any exclusion will be based upon an individual and concrete decision, participation in the project phase immediately preceding the tender will normally result in exclusion. An appraisal prior to the tender will normally be regarded as sufficient to clear a person or company from exclusion on the grounds of an unfair competitive advantage.

In order to avoid any doubt about eligibility, DEPA may require a person or a company to agree to waive participation in a subsequent tender on the same project.

3.3.4 DEPA's Manual for Tendering and Contracting

DEPA contracting manual
DEPA has issued a separate manual for the tendering and contracting of projects; this manual also applies to projects funded under the DANCEE.

The separate manual provides a detailed description of DEPA's rules of procedure for award of contracts, standard contract forms and guidelines for various contract issues.

All detailed questions about tendering and contracting are referred to the separate manual.

Notes:

3. Fidic contract forms include: