Service contracts

✔ Service contract comprise study and technical assistance contracts
✔ Service contracts may be concluded at global price or can be fee-based
✔ Different procurement procedures apply, basing on the amount of the contract

WHAT ARE SERVICE CONTRACTS?

Technical and economic support in the course of cooperation policy involves recourse to outside know-how on the basis of service contracts, most of them for studies or technical assistance. Study contracts include studies for the identification and preparation of projects, feasibility studies, economic and market studies, technical studies, evaluations and audits. They generally specify an outcome, i.e. the contractor must provide a given product: the technical and operational means by which it achieves the specified outcome are irrelevant. Technical assistance contracts are service contracts where a service provider is called on to play an advisory role, to manage or supervise a project, or to provide the expertise specified in the contract.

Service contracts may be concluded in two different ways:

  • global price – where specified outcomes are set out: the service will be paid on the basis of the delivery of the output (e.g. studies, evaluations, audits, trainings etc.);
  • fee-based – where the output is unpredictable, or where the workload to achieve the specified output is impossible to quantify in advance. In this case, it is more advantageous to pay the service on the basis of the time actually worked (e.g. project supervision, facilitation in a multi-stakeholder process etc.).

Some contracts may however combine global price and fee-based: in such cases, each item should have a clear method of measurement and verification, and this should be clear in the terms of reference and in the financial offer template.

WHICH ARE THE SPECIFIC RULES FOR SERVICE CONTRACTS?

They are different basing on the contract amount:

Contracts from € 300,000 and above
Service contracts worth € 300,000 or more must be awarded by means of an international restricted tender procedure following publication of a contract notice.
The contract notice is to be published in all appropriate media, in particular on the Beneficiary’s web site, in the international press and the national press of the country in which the Action is being carried out, or in other specialist periodicals. It must state the number of candidates which will be invited to submit tenders within a range of four to eight candidates, and must be sufficient to ensure genuine competition.
All would-be service providers fulfilling the conditions referred to in section “Eligibility for contracts” may ask to participate but only candidates satisfying the published selection criteria and invited in writing by the Beneficiary may submit a tender.

Contracts of less than € 300,000 but more than € 60,000
Service contracts worth less than € 300,000 but more than € 60,000 must be awarded by means of a competitive negotiated procedure without publication, in which the Beneficiary consults at least three service providers of its choice and negotiates the terms of the contract with one or more of them. When the context requires, the Contracting Authority may require the application of the framework contract procedure.

Contracts of € 60,000 or less
For services of a value of € 60,000 or less, the procedures established by the Beneficiary may be used, while respecting the general principles of procurement, the criteria for eligibility for contracts (i.e. the rule of nationality and the rule of origin) and the common procurement rules. Orders in this case may be placed on the basis of a single tender, too.

Resources and useful links:
PRAG website
Contract-award procedures (Annex IV)


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