Procurement within the scope of projects financed by EU funds

Person writing in notebook
Implementation
Procurement
17/07/2023
JOHN MATHEW
Public procurement holds a significant place in ensuring the most efficient expenditure of public funds. Within the framework of EU tenders, grants are allocated to entrepreneurs, representing a vital incentive for the realization of projects that contribute to their further development and market competitiveness. Entrepreneurs who have applied their projects for certain tenders and have received a funding decision for them, must also take into account procurement for the activities foreseen by the project in the later implementation phase for successful realization and achievement of project goals. Allocated grants may also be subject to repayment if certain irregularities are found during the procurement procedure itself. Financial corrections are applied if the allocated funds were not used for the purposes for which they were intended. The conduct of procurement procedures is not reserved only for obligors of the application of the Public Procurement Act. Legal entities and sole proprietorships that are not obligors of the Public Procurement Act (NOJN) must carry out procurement while respecting certain rules.
Person writing in notebook
Why do I have to conduct a procurement procedure even though I am not a legal obligor? The fundamental principles of public procurement are key to “introducing order” within the framework of market competition among entrepreneurs. The main principles, on the one hand, limit entrepreneurs (in this case, contracting authorities) who are prevented from favoring certain entities to contract jobs (e.g., rigging jobs for family members, acquaintances, and the like), while on the other hand, they organize the market, which enables equal treatment for all entities – potential bidders, according to which they can equally participate in procedures for obtaining and executing work. What is the main framework for conducting procurement for non-obligors of public procurement (NOJN)? According to the Public Procurement Act, basic principles that obligors must respect are defined to prevent illegal actions that would impede fair competition of economic operators in the market. Just like obligors of the application of the Public Procurement Act, non-obligors of the application of the Act must also respect certain principles. NOJNs must adhere to the following principles when conducting the procurement procedure:
  • Avoiding conflicts of interest
  • Principle of proportionality
  • Principle of equal treatment
  • Principle of non-discrimination
  • Principle of rational and economic spending of funds
What are the steps in conducting the procurement procedure for NOJN?
  1. Preparation and publication of the call for tenders
  2. Defining capacity conditions, the subject of procurement, criteria for the selection of the bid, and deadlines for submitting bids
  3. Review and evaluation of received bids
What are the thresholds for applying the rules for non-obligors of the application of the Public Procurement Act?
  1. Procurement procedure with a single bidder For procurement of goods, works, and services with an estimated value up to HRK 150,000.00 – the contracting authority is not obliged to prepare a call for tenders, and in that case, there is no formal review and evaluation of bids conducted in the procurement procedure with mandatory publication.
  2. Procurement procedure with mandatory publication. For procurement of goods, works, and services with an estimated value exceeding HRK 150,000.00 – the contracting authority is obliged to publish the call for tenders on the website www.strukturnifondovi.hr, and in that case, they perform a formal review and evaluation of the received bids.
  3. Special procurement procedures – conducting the procurement procedure by sending or publishing a call for tenders to one or more bidders regardless of the estimated value of the procurement, possible only in exceptional cases.
Calculator next to the papers
What if I do not conduct procurement in accordance with the defined rules that apply to persons who are not obligors of the Public Procurement Act? Properly conducted procurement ultimately ensures the proper implementation of the EU project. The consequence of errors in the procurement procedure, for the beneficiary of grants, can lead to the occurrence of financial corrections, i.e., the complete repayment of the allocated funds. In case of determining irregularities within the scope of project implementation, the competent authority resorts to financial corrections, which are a negative consequence for the project holder. Financial corrections imply the repayment of all or part of the funding paid to the beneficiary, depending on the severity of the determined irregularity. Some examples of applying financial corrections for NOJN
  • Failure to publish the call for tenders
  • Artificial division of contracts to avoid publishing the call for tenders
  • Unjustified use of a special procurement procedure
  • Shortening deadlines
  • Discriminatory technical specifications
What should I pay attention to when conducting procurement procedures?
  • The thresholds for conducting the procedure
  • Grouping of the subject of procurement to avoid the annulment of the procurement procedure
  • Clearly defining the technical specifications of the subject of procurement
  • Clearly defining the capacity conditions of the bidder for the execution of the contract subject
  • Paying attention to deadlines
If you are one of the potential applicants for individual tenders under which you can finance your own projects partly from EU grants, the assumption is that you will have to conduct a procurement procedure for the subject of procurement, which is published on the pages of Structural Funds (https://strukturnifondovi.hr/). Properly conducted procurement is the foundation for the successful implementation of project activities, therefore it is important to properly set up and implement all parts. The article was published on: Women in Adria

Explore More News

Explore our latest updates, expert insights, and funding opportunities designed to keep your business competitive.
Person writing in notebook
EU Funds
4 Mar , 2024

A Guide for Farmers

Whether you’ve just started or have been planning to apply for a non-reimbursable EU grant for some time, I believe you have various questions and dilemmas and are looking for answers.

This manual is the ideal starting point for your search for answers, and it was created after numerous conversations and meetings with farmers who have never applied for or implemented projects co-financed by EU funds.

The manual stems from the need to familiarize users with the fundamental prerequisites/concepts related to agricultural holdings viewed from the aspect of applying for non-reimbursable EU tenders.

The good news that I must emphasize right here is that with the purchase of this manual, you also receive half an hour of telephone consultations during which I will give you answers to your questions related to the content of the manual, as well as free advertising of your products and services on our portal Ethno Dalmacija. Our cooperation doesn’t have to end here; on the contrary, we dare to say that this is just the beginning, and you can see what else we can do for you and how we can help you on our website, where you can choose something for yourself. The price of the guide in PDF format is 70.00 Euros, which you can pay using this payment slip and confirm to us by email: info@zobnica.hr. Once we receive the payment, we will send you the guide by email and arrange a time for telephone consultations!

Take a look at the guide DownloadPay and send an email to info@zobnica.hrDownload

Read more
People doing accounting
Finance
1 Mar , 2023

How to avoid falling into overdraft in business

It is not uncommon for entrepreneurs, especially beginners who are still fighting for their place in the market and working to achieve continuous inflows, to encounter a lack of liquid funds needed to cover primarily fixed operating costs (salaries, overhead costs, etc.). In banks where they have opened business accounts, entrepreneurs can contract an allowed overdraft, the so-called “minus,” which they use to compensate for the lack of funds in order to fully cover the incurred costs. Since a negative account balance is quite a burden for every entrepreneur, even though it doesn’t seem so at the beginning when symbolic amounts are used, it is necessary to be careful, and the most important thing is to create a plan that will completely eliminate the use of overdraft. 1. Continuous monitoring of inflows and outflows – Creating a monitoring model in Excel Continuous monitoring of inflows and outflows can significantly affect the sustainability of business in the future. It is important for an entrepreneur to have timely and accurate information so that they can make correct business decisions. Information is available if detailed monitoring is carried out in the company; in this situation, the company’s director has an insight into the state and movement of transactions, which is one of the important steps for making correct decisions. Situations in which decisions are made without prior detailed analysis can lead to business problems and unnecessary borrowing. Creating a model in Excel for entrepreneurs is an excellent tool with which the movement of funds can be clearly monitored, and the current situation can be checked at any time.
People doing accounting
In addition to having a clear insight into the situation at any time (if records are kept regularly), the entrepreneur can take timely measures to secure additional funds, whether it is cutting costs, securing additional income by contracting new jobs, or regular collection of receivables. It is also important to detail the inflows that the entrepreneur realizes from each individual customer, so that they know how to recognize key customers, but also to terminate business cooperation with those who are a burden to the business. In the case of outflows, it is necessary to monitor and analyze each individual supplier in such a way as to define appropriate payment and delivery deadlines, monitor the quality of the service (goods, works), and changes in prices. 2. Creating a plan of inflows and outflows for a certain time period and comparing the plan with the actual situation Plans are made for a certain period of time; in practice, quarterly, semi-annual, and annual liquidity plans are mostly created. When planning future business, it is important that the plan was created after a certain time during which inflows and outflows were monitored, and an impression of their amount was gained. If it is a beginner entrepreneur, the inflow plan can be based on concluded business cooperation agreements, according to which they can roughly define monthly inflows, while fixed costs are generally known. A plan is always a plan, and of course it can be changed during the period, but it gains its true value only after comparison with the actual situation. Deviations, especially negative ones, are important for analyzing the cause of that negative deviation. They warn us about the existence of a certain problem, which we can describe in the following situation. The entrepreneur’s inflows in the semi-annual period are 20% lower than planned. Although income was generated, the receivable was not collected. It was determined that in the semi-annual period, the customer fell into financial difficulties and has problems with payment, which was reflected in the business of the observed company. The mentioned situation leads us to the next important step that also affects the company’s liquidity. 3. Recognizing problems and defining policies with customers and/or suppliers Deviations of the actual from the planned cash flow projection and problem recognition lead to the need to redefine the terms with customers and suppliers. The same can be changed depending on the length of business cooperation. The terms relate to payment deadlines, approval of discounts on services/goods/works, etc. In order for entrepreneurs to properly define the policy with customers, it is necessary to first establish thorough monitoring of each individual customer, and from the monitoring, provide answers to questions that may be focused on: defining discounts, warning whether a reliable customer is up-to-date with payments, whether their income is decreasing, what is the quality of the service, whether they introduce new services. On the other hand, in the case of suppliers, it is also necessary to monitor business, and certainly negotiate the possibility of servicing, securing the object of purchase, and return deadlines. 4. Business seasonality If the activity performed by the entrepreneur is characterized by seasonality, it is necessary to take into account the planning of liquid operations in months with reduced inflow. Monitoring liquidity, at least at the monthly level, can ensure liquid operations throughout the year and prevent potential problems with current liquidity that can be prolonged to a longer period. Monitoring liquidity and projections for the coming months of operation will ensure liquidity in the months when a reduction in the volume of work is evident. Given the type of activity, company owners are sometimes “condemned” to only a few customers/suppliers. If an individual customer also encounters liquidity problems, the resulting situation is reflected in the company, so in such situations it is good to create a certain reserve that will help bridge the problematic period. Account overdraft is an expensive source of financing and should therefore be avoided. This can be achieved with clearly adopted measures and a plan that will ensure business liquidity. Analysis of historical operations, monitoring of current and planning of future operations are measures that every entrepreneur must implement, and monitoring models are an excellent tool that helps directors see how their decisions affect the company’s cash flow and prevent entry into overdrafts on transaction accounts. Article published on: Women in Adria



Read more