Public procurement in Norway

1. Public procurement in Norway Isabell Fjetland, Associate, Magnusson in association with Kluge Vilnius, 25th November 2013

2. Today’s subject • The Norwegian procurement market • A short introduction to the Norwegian procurement system • Special features in the Norwegian procurement system • Areas that requires special caution / Practical advice Magnusson - The Baltic Sea Region Law Firm

3. The Norwegian market Magnusson - The Baltic Sea Region Law Firm

4. The Norwegian procurement market • The public sector in Norway spend more than 398 billion kroners (167 billion litas) on supply and services each year. This constitutes more than 15 percent of the gross national product in Norway (BNP). • Procurements over EU-tresholds is estimated to be around 80 billion kroners (34 billion litas) • Norway is one of those countries in the EU that award most contracts in % to tenderers in other member states. Magnusson - The Baltic Sea Region Law Firm

5. Share of direct cross-boarder Magnusson - The Baltic Sea Region Law Firm

6. Share of indirect cross-border Magnusson - The Baltic Sea Region Law Firm

7. Norwegian procurement market • Norway should be an interesting market for Lithuanian companies. • Lithuanian companies has shown to be competitive in especially the private construction market and are likely to be equally competitive in the public construction market Magnusson - The Baltic Sea Region Law Firm

8. Relevant provisions Magnusson - The Baltic Sea Region Law Firm

9. Legislation • Directive 2004/17/EC and Directive 2004/18/EC (“the Directives”) have been implemented into Norwegian legislation through three different pieces of legislation: • The Procurement Act of 1999 which is of general application and includes principles applicable to public procurement such as, inter alia, equal treatment and transparency.The detailed provisions for the procurement procedure are set out in two regulations: • the Procurement Regulation of 2006 (the “Regulation”), which implements directive 2004/18/EC • the Utilities Regulation of 2006 which implements directive 2004/17/EC, and is applicable to contracting entities that pursue activities in the water, energy, transport, and postal services sectors. Magnusson - The Baltic Sea Region Law Firm

10. Application of the regulation • The Public Procurement Regulation provides a guide to the different thresholds for each level. • Part I: All procurements (also under 500 000 kr) : Basic principles, such as competition, transparancy and objectivity • Part II: Procurements that are covered by the directives over 500 000 and up to EU- treshold Services that are not listed in directive 2004/18/EF Annex II, independent of value • Part III: Procurements over EU-tresholds • The rules in part II and III are quite similar, but it is a higher degree of flexibility in part II. I.a. there is a wider access to negotiations • DOFFIN– database for publicprocurementnoticeshttp://www.english.doffin.no/Default.aspx Magnusson - The Baltic Sea Region Law Firm

11. Special features Magnusson - The Baltic Sea Region Law Firm

12. Social considerations • Environmental and social considerations have a central place in procurements in Norway. • The Governments has stated that procurement in the public sector should take place with the minimum of environmental impact and with respect for fundamental workers’ rights and Human rights. • The duty to take social considerations are expressed several places in the legislation, i.a the Procurment Act § 6 states that the contracting authority shall under the planning of each procurement take into consideration the life cycle cost and environmental consequences of the procurement Magnusson - The Baltic Sea Region Law Firm

13. Social considerations • Social considerations can be maintained throughout all phases of the procurement process • Technical specifications (materials, methods etc.) • Selection criteria (management systems) • Award procedure (quality, life cyclus costs, etc.) • Criteria in contract clauses (fair trade-clauses etc.) • As a main rule it is up to the contracting authority how he will pursue these consideration . In certain areas there are certain minimum requirements in the procurement legislation. Magnusson - The Baltic Sea Region Law Firm

14. Environmental, safety and health • According to the Regulation the contracting authorities shall in all contracts over 100 000 NOK require a EHS self-declaration. • Foreign contractors must confirm that, in preparing the tender, account has been taken of the health-related, environmental and safety-related legislation set out in the Regulations relating to systematic health, environmental and safety activities in enterprises (the Internal Control Regulations). • They must also accept that the contracting authorities, upon request, shall be entitled to review and verify the enterprise’s system for undertaking environment, health and safety work. • The declaration must be signed by general manager and an employee representative Magnusson - The Baltic Sea Region Law Firm

15. Regulation on Pay and Working conditions • According to the Regulation on Pay and Working Conditions in Public Contracts Contracting authorities shall impose as an obligation in their contracts a requirement that workers hired by contractors and potentially sub-contractors that contribute directly in fulfilling the contract and that performs work in Norway, receive “Norwegian” pay and working conditions. • The requirements apply equally to Norwegian contractors as to contractors established in other EEA States taking part in public procurement proceedings in Norway. • Only applies for work that is preformed in Norway Magnusson - The Baltic Sea Region Law Firm

16. Pay-clauses • In areas covered by a regulation that declare collective agreements generally applicable contracting authorities shall require that pay and working conditions are in accordance with applicable regulations. Such provisions are given within i.a. constructions and cleaning.http://www.regjeringen.no/en/dep/ad/topics/the-working-environment-and-safety.html?id=936 • In areas not covered by a regulation that declare collective agreements generally applicable contracting authorities shall require that pay and working conditions are in accordance with applicable nationwide collective agreements for the industry. Pay and working condition are in this regard to be understood as provisions on minimum working time, pay, including over time payment, shift bonus and inconvenience payment, and covering of expenses to travel, board and lodging, so far as such provisions can be found in the collective agreement. Magnusson - The Baltic Sea Region Law Firm

17. Right to information and sanctions • To secure the relevant provision effect, the regulation further states that the contracting authorities shall: • Impose an obligation on the contractor and potentially sub-contractors on demand to document that requirements as regards pay and working conditions are fulfilled. • Secure the right to perform necessary sanctions if the contractor or potentially sub-contractors do not fulfill the requirements. Sanctions should be suitable for influencing the contractor or sub-contractor to fulfill the requirements. (Example damages two times the savings the provider has had, right to rescission of contract etc.) Magnusson - The Baltic Sea Region Law Firm

18. Control • The regulation states that the Contracting authorities shall undertake necessary control to see if the obligations regarding pay and working conditions are fulfilled. • The Labour Inspectorate Authority (“Arbeidstilsynet”) are granted powers to monitor compliance by public procurement authorities with their obligations arising from the obligation. If the public authorities don’t fulfill their obligations they can from 1st of January 2014 be granted a fine. Magnusson - The Baltic Sea Region Law Firm

19. Practicaladvice Magnusson - The Baltic Sea Region Law Firm

20. Practical advice I • Read the procurement documents carefully • Make sure you understand the procurement documents • If something is unclear: Ask questions! • Make sure you meet all the qualification criteria and that you are able to demonstrate it • Make sure you have the necessary documentation in order (tax declaration and EHS self-declarations), that they are signed by right persons etc. • Normally it is not permitted to send these documents in later • When writing the technical proposal: • Be especially careful that your tender meets all minimum requirements • Describe the tenderers service/ supply offered, in line with the requirements of the terms of reference contained in the tender dossier. • The technical proposal should demonstrate an understanding of the tender specifications and should be prepared in line with the award criteria against which it will be evaluated. • Your selling – be commercial! Magnusson - The Baltic Sea Region Law Firm

21. Practical advice II • Don’t depart from the technical specifications or other elements in the procurement conditions unless you have to • If the non-compliance/reservation concerns a fundamental element, the contracting authority must reject the tender. • A fundamental element is a circumstance that can have a significant effect in the competitive situation (i.a. price, delivery schedule, quantities, significant contractual terms, minimum requirements and other elements that are not possible to put a price on). • Derogations will almost without exceptions give the contracting authority a right to reject. • If the contracting authority chooses to take a non-compliant tender into consideration, the variance/condition must be priced. The pricing must be made in such a way that the tenderer which has made the reservation is not, a result of making reservation, put in a more advantageous position than a tenderer that has not made a reservation. – high price! Magnusson - The Baltic Sea Region Law Firm

22. Practical advice III • Make sure the tender is clear and consistent • The tenderers are responsible for their tender being clear and unambiguous, so if the tender. If the tender is unclear, the contracting authority is entitled interpret the unclear formulation as a reservation and thus the tender can or must be rejected. • Be especially careful with: • Submission letter • Standard terms • Get a Norwegian-speaking colleague, partner or advisor to read through the tender • Procurement documents will normally just be available in Norwegian / It could be difficult to know all the special features in the national legislation • Cooperate with Norwegian partners the first time you submit tenders: Consortium or subcontracting / seek legal advice • If you loose: Ask for Magnusson - The Baltic Sea Region Law Firm

23. Thank you! Isabell Fjetland isabell.fjetland@kluge.no +47 23 11 01 72 +47 93 28 43 21 Magnusson - The Baltic Sea Region Law Firm