ANNEX DEFINITION OF THE METHODOLOGY TO BE FOLLOWED BY THE SERVICES OF THE COMMISSION FOR PROSPECTING AND NEGOTIATING FOR BUILDINGS

ANNEX DEFINITION OF THE METHODOLOGY TO BE FOLLOWED BY THE SERVICES OF THE COMMISSION FOR PROSPECTING AND NEGOTIATING FOR BUILDINGS 1. INTRODUCTION In its communication on buildings policy 1 the Commission adopted the principles of a new methodology aimed at improving the implementation of the existing procedures envisaged by the legislator for signing buildings contracts, on the one hand by adding the element of systematic market prospection by means of publication of publication of proposed real estate projects, and on the other by structuring and clarifying the Commission's internal procedures. This methodology will be applicable for the buildings to be occupied by the Commission's services in Brussels and Luxembourg, including those occupied by the executive agencies. It may also be used within an interinstitutional framework, in particular by the interinstitutional offices. All the users of this methodology should observe strictly the principles of long-term planning and timely publication of their buildings requirements. The new methodology is presented here in detail. It aims to preserve the necessary discretionary power of the Commission in the field of buildings procurement contracts, while guaranteeing the best price-quality ratio. This methodology, which comes under the procedures provided for by the Financial Regulation and its implementing rules, clarifies and details the prospection and negotiation phases of the procedure. This option has the benefit of increasing transparency while respecting the regulatory framework in force. The proposed methodology consists of six phases: preliminary phase: identification and publication of the Commission's multiannual needs; phase 1: definition of the needs for all new buildings; phase 2: publication of the Building Prospection Notice (API); phase 3: analysis and preselection; phase 4: preliminary studies, negotiation of technical and financial conditions and selection of the project adopted; phase 5: technical study and draft contract for the selected project; phase 6: interservice consultation and award of contract. 2. LEGAL FRAMEWORK Buildings contracts at the European Commission are governed by the Financial Regulation (which incorporates the provisions of Directive 2004/18/EC 1 on the coordination of procedures for awarding public works contracts, public supply contracts and public service contracts). 1 Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts, OJ L 134, 30.4.2004, p. 114. EN 1 EN

Article 91 of the Financial Regulation establishes five procedures for awarding public contracts: open procedure, restricted procedure, competition, negotiated procedure and competitive dialogue. In view of the nature of buildings contracts, the purpose of which is purchase, emphyteosis, usufruct, leasing, rental, or sale and lease-back, with or without a purchase option, of land, existing buildings or other property, the legislator has provided for the possibility of using a negotiated procedure after prospection of the local market without publishing a contract notice (Article 126(1)(h) of the implementing rules of the Financial Regulation). 3. NEW METHODOLOGY 3.1. Principles The proposed methodology provides for: better information for the market by means of the annual publication of an estimate of the Commission's buildings space requirements for the current year and the following four years. This information will be published in OJ S 2 and will also be available electronically via the TED service 3 and on the relevant Commission websites at the start of each year. This market information will be additional to the systematic market survey on buildings availability carried out by the competent services 4 ; increased competition among the market players by the systematic publication, in the OJ S and on the relevant Commission websites, of the specific needs for all new real estate projects and by the introduction of the concept of systematic negotiation of the financial and technical conditions with several tenderers in parallel. Projects for development of a new building and/or a set of new buildings on land offered/sold by a Member State and/or owned by the Commission will follow the procedures for the award of public contracts in accordance with the Financial Regulation and its implementing rules; increased transparency of the procedure, in particular by the systematic publication of building prospection notices containing: the minimum requirements of each specific project; the exclusion and prospection criteria; the result of the procedure; greater cooperation and interaction between the relevant Commission departments, on the one hand by setting up a multi-disciplinary committee, the Real Estate Committee 5, which will be required to give advisory opinions to the authorising officer by delegation 6 at all the phases listed in point 3.2, and on the other by developing a rapid diagnostic capacity in order to address any issues presenting major financial and/or technical difficulties. 2 3 4 5 6 Supplement to the Official Journal of the European Union Tenders Electronic Daily http://ted.europa.eu The services in charge of technical and legal real estate negotiations at OIB and OIL and/or at the other users of this methodology (executive agencies, interinstitutional offices, etc.). See point 3.2. The Director of the departments concerned EN 2 EN

3.2. The Real Estate Committee The Real Estate Committee will be made up of members of the following Commission departments: OIB or OIL; in the event that this methodology is used by an executive agency or an interinstitutional office, a representative of this user; DG ADMIN; DG DIGIT; a representative of the Occupational Health and Safety Committee designated by the Committee; an observer from the Secretariat-General; an observer from the DG/body that is to occupy the building (if known). The members will be designated by the management of the respective department. A single real estate committee will be set up for each site (Brussels and Luxembourg), which will be required to monitor all real estate issues relating to the site. To ensure better knowledge of the experience acquired and the consistency of the procedures followed, DG ADMIN will hold regular meetings with the real estate committees of both sites. The Committee will adopt its rules of procedure. For each project, the competent departments will be required to submit the file to the Real Estate Committee for review at the following stages: prior to the publication of the documents relating to a building prospection notice; when candidates are placed on a shortlist for negotiations; when a candidate is selected to begin the fitting-out studies in order to draw up the complete technical file; during the final selection, before launching the CIS. The Real Estate Committee may at any time, particularly in the critical phases of the procedure, call on outside and/or internal experts regarding any technical or financial matters. These experts may be consulted on an ad hoc basis, in accordance with the fourth subparagraph of Article 146(2) of the implementing rules of the Financial Regulation. The experts will in no case be members of the Real Estate Committee. The opinion of the Real Estate Committee will not be binding. The authorising officer by delegation will take decisions at his own responsibility. However, he must give written reasons for any departure from the opinion of the Real Estate Committee. 3.3. Phases of the methodology 3.3.1. Preliminary Phase: identification of multiannual needs and publication At the beginning of each year, the Commission will publish in OJ S and on its relevant websites all its estimated needs for the current year and for the next four years. These multiannual needs will be updated in each annual publication. This estimate does not constitute a commitment on the part of the Commission or a request for the interested parties to submit proposals. EN 3 EN

The offices (OIB/OIL) will estimate the needs in cooperation with DG BUDG and DG ADMIN, based in particular on the multiannual policy framework for buildings (MAPF). 3.3.2. Phase I: definition of needs 3.3.2.1. Need per building The need for any specific new building is identified in two ways: (a) (b) 3.3.2.2. Building prospection notice Monitoring by OIB/OIL of the expiry of current property contracts, taking account of planned changes in staffing levels at the Commission; or following a request in response to a specific need. For each real estate contract, the competent departments will draw up the building prospection notices, which will contain at least the following information 7 : (a) (b) (c) the purpose of the search; the minimum requirements (technical and legal) of each specific project; a list of conformity with the MIT (Building Standards Manual); (d) the essential elements per type of contract and the planned timeframes; (e) (f) exclusion criteria; prospection criteria. At this stage, the conditions for the various types of occupation (purchase, usufruct, lease) will be set out, and tenderers will have to submit proposals for each of these three options, paying particular attention to the best quality-price ratio. This will provide the financial elements necessary for carrying out the successive analyses of VAT and other tax issues (Phase IV). 3.3.3. Phase II: publication For each specific need, a building prospection notice will be published in the OJ S and on the relevant Commission website. All pertinent information will be provided for individuals/companies wishing to put forward one or more buildings under the current building prospection notice. In addition to the building prospection notice, a mailing list will be created to inform interested individuals/companies of upcoming notices. The deadline for a reply will be established on a case-by-case basis but must not be shorter than 37 calendar days. 3.3.4. Phase III: analysis and preselection (a) This phase is divided into several sub-phases. The preliminary analysis consists of verifying that the tenders are legally compliant and that the minimum requirements established in the building 7 This information will be set out in the standard format to be established for that purpose. EN 4 EN

prospection notice have been met. Tenders which are not legally compliant, which do not contain the declaration concerning the exclusion criteria and/or which fail to meet the minimum requirements will not be admitted. Excluded tenderers will be notified. (b) Eligible proposals will be analysed on the basis of the prospection criteria 8, including quality (conformity with the MIT, the architectural policy document and the housing conditions manual), effectiveness, location, feasibility, delivery dates (basic building and fitting-out work) and the financial conditions for meeting the minimum requirements. (c) A maximum of three buildings will be preselected. The preselected tenderers will be notified and asked to provide evidence relating to the exclusion criteria (Article 134 of the implementing rules of the Financial Regulation). All the tenderers not selected at this stage will be notified. At this stage of the procedure, the preselected tenderers must sign the "guide to the procedures, explaining the new methodology and the conditions applicable for leasing/purchasing buildings" 9 before beginning negotiations. This preliminary analysis will be submitted for an opinion to the Real Estate Committee, which will first ask for the opinion of an internal expert and, if necessary, an external expert on any specific technical or financial issues concerning this preselection. If several tenderers propose the same project or property, the Commission will ask the owner to identify the exclusive or primary agent for the negotiations. Negotiations will begin with all the selected tenderers. 3.3.5. Phase IV: preliminary studies, negotiation of technical and financial conditions and selection The competent departments will draw up a programme of needs (specifications for the preliminary studies), which will be sent to the three preselected tenderers so that they can submit comparable price offers containing sufficient technical and financial elements to enable a comparison to be made. If a purchase or long lease with option to purchase is proposed, the tenderers will be informed of any financial arrangements that may involve equity financing in order to obtain the best financing rates for the Commission. The competent departments will then visit the buildings, analyse the preliminary study files and negotiate the occupation conditions for each of the preselected projects. At this stage the competent services may make specific requests to the tenderers in order to make the offers comparable (see points (2) and (3) below). If during this phase a more detailed analysis reveals that the results of the previous phases may be invalid, for example because the project(s) do(es) not meet the minimum requirements set out when the building prospection notice was issued, the project(s) in question will be excluded from the procedure. The competent departments will inform the Real Estate Committee, which will issue an opinion as to whether the preselection should be reviewed. One or more of the tenderers who were not selected in the previous phase but who meet the basic requirements and the exclusion criteria may be invited to take part in this Phase IV. 8 9 This list of criteria is not exhaustive. Decisions will be made on a case-by-case basis by the authorising officer by delegation. The communication COM(2007)501 states that the guide will be published in 2008. EN 5 EN

Following the negotiations of the technical and financial conditions with the three tenderers in parallel and the analyses carried out by the competent departments, a single project will be selected for the following phase. This selection will take account of the overall cost of the projects, which will be evaluated on the basis of: (1) the negotiated price according to the type of contract (purchase, usufruct, lease); (2) an estimate of the costs necessary for compliance with the MIT, the architectural policy document and the housing conditions manual; (3) an estimate of the cost of specific fitting-out works; (4) the schedule for making the buildings available; (5) an analysis by the competent departments of the tax implications (VAT, other taxes, dues, etc.); (6) an assessment of the operational costs of the various proposals, as soon as the Life Cycle Cost studies allow. The work indicated at this stage will not constitute the definitive list of work to be carried out and will not commit the Commission to effectively carrying out this work. The competent departments will submit their report to the Real Estate Committee, which will issue an opinion and send it to the authorising officer by delegation. The authorising officer by delegation will notify the selected tenderer, who must guarantee that the project is being offered exclusively to the Commission until the end of the decision-making procedure. The tenderers not selected will also be notified. 3.3.6. Phase V: technical and contractual phase 3.3.6.1. Drawing up of the technical dossier After a preliminary analysis carried out in accordance with the procedure laid down in point 3.3.5, the tenderer will draw up a complete technical dossier for the fittingout and upgrade work, which will enable him to consult the market in order to submit a final price and a schedule for making the building available. The competent departments will supervise the drawing up of this technical dossier, if necessary with the participation of the DG/body which is to occupy the building (if known). These departments will ensure, as far as possible, that the cost of the works presented by the tenderer do not include profit margins on top of the coordination costs and financial charges. They will also endeavour to ensure the most favourable financing conditions, on the one hand by negotiating with several financial partners in parallel and on the other by verifying, on a case-by-case basis, the benefits of involving the European Investment Bank (EIB) in the project or of establishing a public-private partnership. If, during this phase, it is discovered that a project does not meet the minimum requirements set out when the building prospection notice was issued, the competent services will inform the Real Estate Committee, which will evaluate whether the preselection needs to be reviewed. EN 6 EN

If there is any significant change in the price with respect to the offer submitted in phase IV, the authorising officer by delegation may review the conclusions of this phase and revert to the preceding phase. 3.3.6.2. Drawing up of the contractual documents (draft) During this phase the legal aspects (constraints, permits, pollution, etc.) will be analysed in detail (due diligence), and the contractual documents will be negotiated with the tenderer's representative in parallel with the technical studies. 3.3.7. Phase VI: Internal approval procedure Before launching this phase, the Real Estate Committee will submit its opinion on the tender selected at the end of the negotiations that take place during Phase V. 3.3.7.1. Interservice consultation (CIS) The competent services will propose that ADMIN begin an interservice consultation with the Legal Service and DG BUDG on the real-estate procedure note in accordance with the Commission Decision of 16 January 2004 (SEC(2004)62). The competent services will negotiate with the tenderer on how to integrate the opinions and suggestions from the services consulted into the contractual documents. DG BUDG will evaluate whether the projects submitted for consultation have significant financial implications and whether, in accordance with Article 179 of the Financial Regulation, the budgetary authority must be informed of the project in question. In the case of building projects of which the budgetary authority must be informed, the authorising officer may proceed with the planned operation once the procedure of Article 179 of the Financial Regulation has been completed. However, if the nature of the opinions issued by one or both arms of the budgetary authority so requires, the competent Member, in collaboration with the Member responsible for the budget, must submit to the Commission the final decision on the execution of the building project. 3.3.7.2. Drawing up of the final contractual documents The completed dossier must be submitted to the authorising officer by delegation, who will take the final award decision, ask the successful tenderer to supply updated proof that the exclusion criteria do not apply to him and proceed with signing the contract. 4. DEROGATIONS NON-APPLICATION OF THE MÉTHODOLOGY By way of exception, particularly in the event of occupation of a building as a matter of urgency, extension of an existing lease and occupation of a building immediately adjacent to a building already occupied by the Commission, or for any other duly substantiated technical, financial or strategic reason, the competent services may decide not to apply the methodology described above and proceed with negotiations without preliminary publication of a building prospection notice. The competent services will request a prior opinion on the proposed derogation from the Real Estate Committee for the site in question. Once the opinion is given, the competent services will be able to decide whether or not to begin negotiations with the tenderer in question. EN 7 EN

5. RELINQUISHMENT OF THE METHODOLOGY AND/OR DISCONTINUATION OF NEGOTIATIONS The use of this methodology imposes no obligation on the competent authorising officer to continue to the end of the procedure. In order to guarantee the best quality-price ratio, the authorising officer may decide at any time, provided he duly substantiates his decision, either to relinquish this methodology while continuing negotiations or to discontinue the negotiations and abandon the procedure. The authorising officer may in all cases discontinue negotiations with a tenderer if the tender is found to be non compliant at any stage of the procedure. 6. REVISION An impact assessment of this new methodology, in particular of its effectiveness, will be made three years after its introduction. EN 8 EN