The European Commission has recently published its Public Procurement Guidance for Practitioners on the avoidance of the most common errors in projects funded by the European Structural and Investment Funds ("the Guide").

We have helped many clients where the European auditors have arrived to carry out their audits - often many years after a project funded by EU funding has been completed. Breaches of EU funding take many forms from files that can't be found, to lack of clarity over eligible expenses but the most common issues often lie in breaches of the procurement rules. The Guide (albeit it based on when the Public Contracts Regulations 2006 (as amended) were the prevailing rules) offers very useful insight into common areas where authorities are found to have been in breach.

As a quick guide we have pulled the red warning issues - those which point out where the most common and serious mistakes arise - into a list below. For a full read of the Guide please click on the link here.

For more information of how we can help you on preparing for audits, avoiding the pitfalls or helping when facing a clawback (and where possible supporting to achieve a reduction in the amount claimed) please contact our team below.

Our team is also experienced in supporting on State aid compliance on EU funded projects and supporting when the auditor finds an alleged breach of the State aid rules.

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1. Preparation and Planning - Planning is crucial. If the CA gets this part of the process wrong, mistakes and problems will most likely follow. Many errors can be traced back to inadequate planning. At this stage it is recommended to elaborate standard templates for communication with tenderers, to record key decisions (i.e. to register information known at that stage, available options and justification of the preferred option) and to have rules concerning planning, conducting and control of the procurement procedures

1.2 Contract/project management – Integrity and conflicts of interest - Discovery of an undeclared conflict of interest may put the impartiality of the procurement process in doubt and lead to financial corrections. See Link to OECD principles on integrity in public procurement: link See more on anti-fraud and anti-corruption measures in Article 125 of Regulation (EU) No 1303/2013 in Toolkit 10

1.5 Thresholds and advertising – Above the thresholds, advertising in the OJEU is mandatory - Failure to advertise is one of the most serious errors. If in any doubt, advertising in the OJEU is recommended as a way of ensuring EU wide competition

1.5 Thresholds and advertising – Artificial splitting of contracts - Artificial splitting of contracts so that they fall below the EU thresholds for publication is illegal

2. Publication – Contract Notice (CN) - Other than in very specific cases, lack of publication of a CN for a contract with a value above the thresholds will be considered a breach of EU procurement rules and may lead to financial corrections. Compliance with the advertisement requirements of Directive 2004/18/EC is secured when all information required by the standard form is provided in a clear and precise manner

2.3 Tender documents - CAs should not change the selection or award criteria after publication of the CN, except by means of a published corrigendum. The Evaluation Committee should only use the published criteria

2.3.1 Setting up selection criteria - Any criterion that could be interpreted as being discriminatory or disproportionate is not acceptable according to Directive 2004/18/EC and may lead to financial corrections. Material changes of the selection criteria once set are not acceptable. After publication only minor changes within the main selection criteria are acceptable, such as changes in the wording or the address for submission of application. Changes in requirements such as the financial standing (yearly revenue or equity rate), the number of references or the insurance cover are considered material changes and they require an extension of the application deadline or a cancellation

2.4.2 Standard to be used when drafting specifications - The specification is the single most critical document influencing the overall quality and competitiveness of the procurement process. Any terms which can be interpreted as discriminatory, particularly against tenderers from another country or requiring goods that only one supplier (or suppliers from one country) can deliver are not acceptable

2.5 Obtaining and submitting tenders - Short timelines can be interpreted as a barrier to competition. High, disproportionate fees for tender dossiers can be interpreted as a barrier to competition

4. Evaluation of tenders - Never amend the award criteria or evaluation methodology midway through the procurement process

4.2 Most economically advantageous tender (MEAT) - If MEAT is to be used, details of all the criteria (as well as the proposed evaluation methodology) must be included - in order of importance – in either the CN or the tender documents or both.

4.4 Clarifications - Clarifications should not have the effect of changing the already submitted tender in relation to substantial information such as pricing, quality and service elements. All communication with tenderers must be fully documented

5. Award - Failure to publish the contract award notice is a relatively common error that can be eliminated through the use of checklists and key stage controls. As soon as it is noticed that a contract award notice has not been published, even after the 48 day period, CAs should nonetheless take immediate action to ensure that it is published

6. Contract implementation - Modifications of contracts and the use of a negotiated procedure for additional works with an existing contractor without any tendering of these additional works or services is one of the most common and serious errors. In most cases, if significant additional works/services are needed then a new contract should be tendered. The only exceptions to this general rule are set out in Article 31 of Directive 2004/18/EC. However, as Article 31 is a derogation from the general rule that additional works/services should be re-tendered, it should only be used in exceptional circumstances and needs to be justified. The burden of proof for the circumstances allowing for the use of this procedure rests with the CA. Audits focus very closely on this issue