Understanding OJEU and ERP Selection
Is your organisation subject to public procurement policy? If you’re planning to embark on an ERP implementation you may need to follow strict rules for tendering via the Official Journal of the European Union (OJEU). This article explains what OJEU is and its implications for selecting an ERP supplier.
What is OJEU?
OJEU stands for the Official Journal of the European Union. It sets out the EU's legislation governing public procurement and lists all relevant tender notices and contract awards within the EU. OJEU is intended to provide suppliers across the EU with a fair and equal opportunity to bid for public spending in any member state. It includes a set of procedures that aim to ensure transparency of the tendering process and best value for taxpayer money.
Who does OJEU apply to?
The EU's procurement legislation applies to all public-sector bodies in all EU countries. This is more than just central government agencies. It includes commercial and non-commercial state bodies, public utility providers as well as local and regional authorities, health boards etc. Any contracts awarded by these bodies that will exceed certain thresholds must follow the OJEU procedures. OJEU also applies to some spending by private companies, if it is subsidised by public funds.
What are the OJEU thresholds?
There is a series of thresholds that govern whether you need to tender through OJEU. The current thresholds for goods and services range from €135,000 to €418,000 excluding VAT, depending on what type of public body you are. The Sterling thresholds range from £106,000 to £328,000. From our experience, most ERP implementation projects exceed these thresholds, therefore the OJEU procedures would apply.
What do the OJEU procedures entail?
There are six options for navigating OJEU, each of which sets out a series of mandatory steps and timescales for tendering and awarding contracts. The options vary based on the level of supplier interaction you require in order to make a suitably informed decision. Our view is that the Competitive Dialogue option is most suited to ERP selection.
The Competitive Dialogue procedure allows for you to enter dialogue with multiple suppliers after an initial shortlisting stage, and to refine your technical specifications on the basis of that dialogue. Most importantly, in our view, it enables you to invite suppliers to demonstrate their solutions. You can reduce the shortlist based on an evaluation of those demos and supplier reference checks before a final invitation to tender is issued. Of the various OJEU options, the Competitive Dialogue procedure aligns most closely with Lumenia's standard ERP selection methodology.
All material pertaining to the contract for goods or services must be published as part of the initial tender notice. This means preparing and publishing the functional and non-functional requirements for the ERP system up front, along with any demo scripts, evaluation criteria and weightings for shortlisting and selection. The tender notice must be published for 30 days and must be openly accessible by any and all suppliers across the EU.
Once a preferred supplier has been selected, OJEU requires that their name be published and a 10-day 'standstill' period be allowed, during which other suppliers can challenge the decision. If challenged, evaluation material may need to be released as proof that the selection process was unbiased. A final notice is then published once the contract has been awarded.
How onerous is OJEU?
The bulk of the work required to comply with OJEU is not particularly difficult or unique; indeed, most of it aligns with good selection and procurement practice as should be carried out in the commercial sector. The sequencing and timeframes, however, can be demanding. The main challenges imposed by OJEU are the front-loading of work, the potentially high number of respondents, and the possibility of being challenged on the selection outcome by unsuccessful bidders.
Navigating these challenges can push project timeframes beyond your desired dates or deadlines, but there are steps you can take to minimise their impact. We recommend being careful and deliberate in defining your evaluation criteria at the outset, as well-designed criteria can help narrow the field of likely respondents substantially. For example, specify that suppliers should have a local support presence if this is appropriate. Equally, apply your evaluation criteria rigorously during the shortlisting and final selection stages. Leave no room for ambiguity so that justifying your selection in the face of challenges won’t prove difficult.
Does Brexit mean UK organisations won’t have to follow OJEU?
We don’t have a definitive answer to this yet. Applicable laws and guidelines for public procurement in the UK after Brexit will depend on the outcome of its trade negotiations with the EU. It may be that the UK will still subscribe to OJEU or an equivalent. Until April 2019, at the earliest, it still applies.
Can OJEU be avoided?
You may be able to avoid OJEU by procuring through a framework agreement. Framework agreements contain a panel of suppliers that have already been through an OJEU tendering process to be appointed to that panel, negating the need for full OJEU selection each time their services are required. Public bodies can effectively call off orders from suppliers listed within a framework agreement.
There are several all-of-government framework agreements in the UK that include ERP suppliers and services, such as the Corporate Software Solutions and G-Cloud framework agreements. Additionally, you may belong to one or more sector-specific purchasing consortiums that have their own framework agreements.
Purchasing through framework agreements can reduce timeframes and make ERP selection less painful, but do be aware of the drawbacks. In particular, the range of suppliers included within any one framework agreement will be limited, so you may not be selecting from the most suitable or best-value suppliers or products on the market to meet your needs. Additionally, there may be little or no flexibility to negotiate pricing, and there are likely to be limitations on the maximum duration of any contracts you award. Finally, be aware that a tendering process or 'mini competition' may still be required to select from suppliers within a framework agreement, albeit less demanding than a full OJEU selection procedure.
Where can I find out more?
Further information on public procurement in Ireland and the UK is available on the following websites:
Public Procurement in the UK
Public Procurement Policy (Crown Commercial Services)
G-cloud framework Agreement (gov.uk Digital Marketplace)
Corporate Software Solutions Framework Agreement (Crown Commercial Services)
Public Procurement in Ireland
Public Procurement Guidelines for goods and service (Office of Government Procurement)
This blog was written by Edward Abrahamson, Principal Consultant at Lumenia. For further information please send an email to Edward Abrahamson.