PPP projects have to follow the same EU and EIB rules as public-procurement projects. In some cases Providers also had to follow EU procurement rules for sub-contracts - where the Provider is not owned by a contractor.
Two different EU procurement procedures were used in the projects evaluated, and the choice of procurement procedure affected how and when the EIB entered the project cycle:
• Restricted procedure - The Promoter invites bids for the PPP contract from a pre-qualified list of bidders, and there is no negotiation after bids have been submitted. In these cases, the Bank did not make financing terms available until after the appointment of the preferred bidder. The EIB financing benefit could therefore only be reflected in the bids if the bidder was prepared to take the risk of EIB funding being available. This also applies to the one round negotiated procedure (see below).
• Negotiated procedure - This can take two forms:
• One round of bidding Pre-qualified bidders make submissions, after which the Promoter enters into detailed negotiations with a preferred bidder. EIB financing terms were not made available until after the appointment of the preferred bidder.
• "Best and Final Offer" (BAFO) Again, pre-qualified bidders make submissions, after which the Promoter may negotiate with a shortlist of two or three bidders which are invited to submit their "BAFOs" in a second round. This approach was used in majority of projects evaluated in-depth. The standard EIB procedure was that the project would be given an initial credit approval during the BAFO preparation phase, based on assumed terms and structure. Outline financing terms were then provided to all BAFO bidders simultaneously. Final credit approval was obtained after the detailed terms had been negotiated with the preferred bidder after the BAFO stage.
Exceptionally, in the case of the rail infrastructure project referred to above, final credit approvals were given for both BAFO bids. This followed a specific request from the Promoter who believed that this would offer the most competitive bidding. A form of "Chinese Wall" was set up between two teams in OPS, but with both teams reporting to the same Head of the Department. The Promoter appreciated that this procedure doubled the EIB's work but was happy to pay the extra costs to achieve the best deal. On other projects, bidders wanted an "arm's length" relationship with the EIB, because they knew the Bank was also talking to competitors. This suggests that the best possible EIB terms might not have been fully taken into account. The parallel appraisal procedure has not been repeated. If it did produce a significant benefit, then the EIB could consider more involvement with bidders during the tendering phase. This example does demonstrate how the Bank has been prepared to modify its relationship with Promoters on a case by case basis, but the benefits may not justify the substantially higher demands on the Bank's staff resources which this particular approach requires.