If the implementation of an Action requires procurement by the Grant beneficiaries, the contract must be awarded to the most economically advantageous tender (i.e. the tender offering the best price-quality ratio), in accordance with the principles of transparency and fair competition for potential contractors and taking care to avoid any conflicts of interest.
Grant beneficiaries have to guarantee the compliance with some fundamental principles and best practices in procurement when awarding contracts in the framework of the European Union funded projects.

Procurement rules established by the EC are consolidated in the PRAG, “the Procurement And Grants for European Union External actions” and its annexes.
Annex IV to the Grant contract,(PRAG annex - E3h3_Contract Award Procedures) is the Annex to which you should refer to when starting a procurement process. Any deviation from the Annex IV requires a derogation from the EC. The EC will carry out ex post checks on Beneficiary(ies)’s compliance with these rules.

The PRAG 2014 refers either to actions financed under the EU budget and the 11th EDF.
This Practical Guide is used by the Directorates General and Commission Services in charge of the instruments financing and implementing external actions, mainly DG DEVCO (aid development through geographic, thematic or mixed instruments, such as DCI, ENI, EDF, EIDHR, NSCI), DG ELARG (Instrument for Pre-accession assistance, IPA II) or the FPI (in the implementation of the Instrument contributing to stability and peace, Isp, and Partnership Instrument, PI).
The eligibility rules applicable to the EDF have been aligned as much as possible with those of the EU budget since the entry into force of the amended Cotonou Agreement in November 2010.

In addition to Annex IV, Grant beneficiaries should have internal procurement guidelines or procedures, to address questions such as internal control and supervision of the tendering process, the preparation of the tender, its publication, the standard bidding documents, the verification procedure for the tenderers, the award procedure, the standard purchase contract, payment procedures, etc.
The basic principle governing the award of contracts is competitive tendering.

The purpose is twofold:

  • to ensure the transparency of operations; and
  • to obtain the desired quality of services, supplies or works at the best possible price.

Procedures to award sub-contracts for goods/services/works may have been initiated but contracts may not be concluded by the beneficiary organisation or its partners before the start of the implementation period of the Action, provided the provisions of Annex IV of the Grant Contract were respected.
There are several different procurement procedures, each allowing for a different degree of competition. Annex IV establishes the rules and procedures to be followed in each case. To this end, the Grant beneficiaries must comply with the rules set out in this annex for the procurement of services, supplies and works.

Resources and useful links:
PRAG website
PRAG annex - E3h3_Contract Award Procedures (Annex IV)