Article

28.03.2016

How to execute a public contract?

Once you have been awarded the contract the real work has to begin, of course. How does this work in practice?

Confirmation and guarantee

You may already know that your company has been selected to execute the contract, but it is only 'official' after the contracting authority has confirmed this through a notification letter. Depending on the type of contract you will then also receive a purchase order or authorisation form.

It is important that these documents are signed by the person coordinating the contract on behalf of the contracting authority – usually the authorised official. If this signature is missing problems may arise afterwards, including when submitting invoices.

To ensure proper execution of the contract the contracting authority will also ask you to provide some form of guarantee, often a bank guarantee. If everything has been completed satisfactorily (and you do not forget to submit the application), you will get the deposit back after final handover.

Uncertain timing

  • For contracts subject to European publication requirements, candidates who have been rejected have 15 days after contract award to appeal against their non-selection. The contract may only commence after this term, provided that there has been no objection or if the complaint is rejected. If there is a complaint and if it is admissible, the procedure may be suspended for an indefinite period or must be restarted.
  • There may be other delays, for example in election periods or because the necessary permits or ministerial signatures are not forthcoming.

Execution, handover and invoicing

It is important that you execute the contract in accordance with the provisions in the specifications and in your tender, otherwise there may be sanctions or claims for damages. Once this has been completed you may submit a handover request. The contracting authority then checks whether your execution satisfies all the requirements and – in case of a positive assessment – provides you with an official handover report. Only then can you submit your invoice.

The safest option is to include the exact terminology of the specifications in your invoice and send it by registered post so that you have a dated receipt. Do not forget to include the official handover report.

And finally, keep in mind that payments from public authorities may take some time, although the statutory payment terms have been significantly shortened as of 2013. For public contracts the payment term is 30 days, although preceded by a verification public of a further 30 days after receipt of the invoice. For certain contracts in the health care sector the payment terms are even longer.

What if something goes wrong?

What are the options, rights and obligations of parties to a public contract?

  • Contract or price changes
    In principle the contract price is fixed. However, unexpected factors may have a significant effect on the price during contract execution, such as legislative changes, increasing material prices and fluctuating exchange rates. In these cases the price may be adjusted by mutual agreement.

    The same applies to the contract: both the principal and the contractor may, provided proper reasons are given, request that certain clauses be revised. Any adjustments and compensations are established during negotiations and attached to the contract as an appendix.
     
  • Complaints and sanctions
    If you believe that the contracting authority has made an error or has not fulfilled its obligations (ambiguous requirement description, errors in specifications, slow decision-making process, etc.), you have the right to file a complaint. If the complaint is admissible you may claim damages, request more time for execution or decide to stop contract execution.

    Obviously the contracting authority has similar rights in the event that your company defaults in executing the contract. In that case the official responsible for the contract may impose penalty fines or sanctions, such as terminating the contract or instructing another party to execute the contract. In that case you will be liable for the incurred costs.

In the event of force majeure, modifications or damages are possible to a certain extent – consider for instance a fire at a supplier's or land subsidence on site. However, the relevant legislation is quite complex. It is therefore advisable to seek legal advice in such cases.

Article

28.03.2016

How do you find public tenders?

Every day dozens of new contracts are published, some of which are undoubtedly of interest to your company. But how and where do you find them?

Self search

It is best to start looking through the official channels, where contracting authorities must publish contracts from a certain threshold amount:

  • the Belgian Bulletin of Public Tenders if the total amount of the contract exceeds 85,000 euros (excluding VAT)
  • the Official Journal of the European Union if the total value of the contract (excluding VAT) exceeds the following threshold amounts:
    • 5,186,000 euros for public works
    • 207,000 euro for goods and services.
      The threshold for public services and defence is 414,000 euros, and for central federal governments it is 134,000 euros.

Contracts with a lower value are usually published on the website of the contracting authority or in the trade press.

Automatic search

Publication of tenders at the Flemish and Federal level takes place electronically through e-Procurement, while Wallonia and Brussels have their own platform. If you register on these platforms, you can create a search profile. This way you are automatically notified if a contract is published that meets your selection criteria (e.g. sector, region, amount, etc.).

There are also several specialised providers in our country that offer a similar, paid service.

Prospecting and networks

As an entrepreneur you know only too well how important prospecting and networking are in forging business relationships with individuals or companies. It is no different for the public and social-profit sector. Cold-calling, visiting a contracting authority, participating in trade fairs, word-of-mouth advertising – these are all proven methods to discover interesting opportunities.

Moreover, the budgets of most contracting authorities are public information. By studying their budget carefully, you can infer a lot about their future needs and capacity to tender contracts.

Let your reputation work in your favour

Just as decisive a factor is the reputation you build up by executing public contracts. If public authorities are familiar with the quality of your products or services they will be more inclined to do business with you again. This is especially an asset in procedures with no disclosure, where the contracting authority selects a number of potential suppliers.

Article

28.03.2016

What information is included in a public tender?

The specifications of the contract contain all the information you need to assess whether your company can take on the contract, to put yourself forward as a candidate and to execute the contract correctly.

Specifically, it will provide you with the following information:

  • Subject of the contract: a clear description of the contract, including all technical details and specifications.
  • Division into lots: in some cases, a contract is divided into several work packages or categories, usually based on geographical, technical or time criteria. These parts are called lots. The specifications indicate whether your company:
    • can put itself forward for one or more lots;
    • can submit a joint tender, e.g. with a sector partner or a company with a complementary offer of products or services.
  • Variants: the contracting authority may ask (or impose on) a candidate to include one or more alternative methods of execution and the corresponding budgets in the tender.
  • Options: additional elements of the contract, regarding which it is not (yet) certain whether or they will be executed effectively. The specifications determine whether or not you are required to submit a tender for these options.
  • Quantity: does the contract involve a fixed/flat-rate or estimated quantity of goods or services to be rendered?
  • Pricing: can you specify a total price, or do you need to break this down and detail each individual cost?
  • Selection criteria: which companies are eligible to execute the contract (financial capacity, experience, technical expertise, etc.).
  • Tender criteria: based on which criteria and according to which procedure/procedures will the contract be awarded.
  • Deadlines: e.g. for the submission of tenders, the evaluation of the applications by the contracting authority, execution of the contract, any required approval by the competent official or minister, etc.
  • Procedural requirements: how and in what form the tender must be drawn up, the required documents, certificates or signatures, and through which channel to submit them.
  • Legal provisions: rights and obligations of the contracting authority and the supplier, guarantees and any penalty clauses (mainly applied by large policy bodies or institutions that operate within a much stricter framework).

Thorough preparation is key

Specifications are usually very transparent. In some cases, however, it may be appropriate to seek legal advice, especially if there are penalty clauses. Also bear in mind that contracting authorities sometimes 'recycle' and adapt existing specifications, which may result in minor flaws or inconsistencies.  If in doubt, do not hesitate to ask for further information or clarification.

Article

28.03.2016

How do you put together a good tender?

The answer to that question is less obvious than it may seem at first glance. A tender for a public contract is much more than a simple quotation. Of course, the strength of your offer plays a crucial role, but it is equally important that you comply with all the rules and procedures. How should you approach this?

1. Check whether your company can execute the contract

Analyse the contract and the specifications and determine which criteria are decisive for the contracting authority to award the contract. Does your company score sufficiently on these points to make a difference?  And especially: is it financially, organisationally and logistically strong enough to successfully complete the contract?

If you are not confident of your chances it might be better not to invest time and energy in further elaboration of the tender.

If you do decide to go for it, do not forget to provide proof in your tender that your company has the necessary capacity (financial, technical, geographic, etc.) to execute the contract. Typically, the contracting authority will explicitly ask for a bank statement or references, for example.

2. Consider the practical side: procedure, procedural requirements and deadlines

With public tenders it is important to follow the procedure down to the minutest details. This is certainly no exaggeration: the slightest omission may mean that you will not be awarded the contract. It is therefore essential to carefully check all the steps you must take and provide all the information and documents required by the contracting authority.

The desired structure and content of your answers is largely fixed. These procedural requirements are extremely rigorous, even if contracts are increasingly tendered through 'flexible' electronic platforms such as e-Procurement. Electronic signatures, correct terminology, number of copies, etc. – success is in the details.

Another essential point is to respect the deadline for submission of the tender. This depends on the procedure and the value of the contract and may vary from one to several weeks. For procedures with European publication requirements you often have more time than for procedures subject to Belgian disclosure obligations. These deadlines are very strict: even if you have submitted the best tender, if you are too late it will not be taken into consideration.

3. Quote a realistic price

Try to provide as accurate, transparent and realistic a price as possible for your solution. Avoid exceptionally high or low prices, as these will only arouse suspicion or immediately be rejected. Does the contract have optional or mandatory variants? If so, indicate clearly why a variant is or is not cheaper than the basic solution.

4. Be concise yet complete

Like you, public procurement officials are busy people who prefer not to browse through large tomes or endless product catalogues. Try to find the right balance in your tender between your sales pitch and the required information. It is a good idea to include a convincing management summary in the tender.

In an ideal tender you show that you know and understand the needs of the contracting authority and can offer the most suitable and economical solution. All this should be in concise, clear and comprehensible wording that respects all the procedural and form requirements. Although it is not the easiest task, it is very rewarding if accomplished successfully.

Avoid pitfalls

Some common reasons why contracting authorities reject a tender:

  • you have not submitted your tender within the submission deadline
  • you did not use the correct channel to submit your tender (e.g. by post instead of e-Procurement)
  • you have not observed all the procedural requirements
  • your tender does not contain all the requested information, documents or (if applicable) proofs
  • your tender and/or the attached documents have not been signed or have not been signed by authorised persons
  • your tender contains conditions, clauses or provisions which are not allowed according to the specifications or legislation on public tendering
  • you have submitted several tenders even though the procedure does not allow this
Article

28.03.2016

Five practical tips to increase your chances of winning a public contract

How do you prepare your company to derive maximum benefit from the market for public contracts?

Define a clear strategy

Obviously the offer and activities provided by your company determine the type of contracts for which you are eligible. But how far are you willing and able to go? It is therefore good to reflect on the following questions:

From which amount or which contract size is it profitable for your company to submit a tender? Remember that preparations can take a lot of time and resources, not to mention the procedure itself.

Do you want to tender for specific contracts or do you want to draw up a type of standard bid to tender for as many contracts as possible?

Which market do you want to target? Do you want to limit your ambitions to local authorities and files, or do you have the resources to serve the biggest contracting authorities, including across national borders?

Reserve the necessary resources

 Be prepared for the organisational and logistical impact of a public contract:

Do your people have the necessary information and know-how (practical, legal, technical, etc.) to put together a tender that meets all the requirements for a public contract? Will it be necessary to provide additional training or call in external experts?

Will you put together a team of employees to deal exclusively with the public contract or will it be an additional task?

Can your company execute the contract alone or would it be better – provided the specifications allow for this – to work with co-contractors or subcontractors?  Do you already have a network of partners who can assist you in this?

Public authorities have relatively long payment terms, which may affect your working capital needs. It is therefore advisable to analyse and optimise your working capital needs.

Start preparing your tender as soon as possible

 Gather all the documents the contracting authority may require in advance: financial information about your company, qualifications, licenses and certificates, certificate of approved contractor, certificate of insurance against professional risks, any references and testimonials, etc.
Also, by preparing a number of standard tenders and price lists in advance you will save a lot of time when it comes to the actual tendering procedures, which often have tight deadlines.

Get to know your prospects and competitors

In many cases, contracting authorities have to publicise a contract and may therefore not contact you directly. Nevertheless, it is definitely worthwhile presenting your company in a proactive way. For example through a prospecting visit, but also a trade fair or an advertisement in the press. Indicate clearly what your expertise is and the range of products or services you offer. It can never hurt to add a few laudatory references, of course ...

It is also useful to keep an eye on what the competition is doing, even before you actively enter the market for public contracts. It may be interesting to follow a number of awarded contracts and study how selected candidates perform, and to see where you might score even better.

Try to find out more about the operating procedures of the contracting authorities

You may already be able to glean a lot from the area of activity and operating funds of the contracting authority, but it is just as important to be familiar with its decision-making process. Who has a say, who decides and on what basis? Who is responsible for the technical and financial aspects? Do you have to convince the procurement department or the users? And, not forgetting: how long does the entire process take?

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