THE EUROPEAN SPACE AGENCY - Basic Procurement Principles of ESA Dr. Karl Eisermann (IPL-PL) Head of the Launchers and HQ Procurement Division ...

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THE EUROPEAN SPACE AGENCY - Basic Procurement Principles of ESA Dr. Karl Eisermann (IPL-PL) Head of the Launchers and HQ Procurement Division ...
THE EUROPEAN SPACE AGENCY

        Basic Procurement Principles of ESA

         Dr. Karl Eisermann (IPL-PL)
         Head of the Launchers and
         HQ Procurement Division
         ESA-HQ

          September 2017
ESA UNCLASSIFIED - For Official Use
THE EUROPEAN SPACE AGENCY - Basic Procurement Principles of ESA Dr. Karl Eisermann (IPL-PL) Head of the Launchers and HQ Procurement Division ...
The European Space Agency
  •    The idea of an independent European Space Agency dates back to the early
        1960’s; ESA was formed in 1975, replacing the satellite and launcher organisations ESRO
       and ELDO;

  •    The ESA Convention entered into force in October 1980;                    ESA    is   an
        Intergovernmental Organisation with its own legal personality;

  •    When procuring, ESA is only bound by its own set of rules and regulations and not by
       the EU Directive on Public Procurement or those of an individual Member State or the EU;

  •    Procurement Policies are adopted by the ESA Council; internal policies are introduced by
       the DG.

ESA UNCLASSIFIED - For Official Use
THE EUROPEAN SPACE AGENCY - Basic Procurement Principles of ESA Dr. Karl Eisermann (IPL-PL) Head of the Launchers and HQ Procurement Division ...
ESA facts and figures

    •    Over 50 years’ experience;

    •    22 Member States;

    •    Eight sites/facilities in
         Europe; about 2300 staff;

    •    5.75 billion Euro budget
         (2017);

    •    Over 80 satellites designed,
         tested and operated in flight.

ESA UNCLASSIFIED - For Official Use
THE EUROPEAN SPACE AGENCY - Basic Procurement Principles of ESA Dr. Karl Eisermann (IPL-PL) Head of the Launchers and HQ Procurement Division ...
Member States

   ESA has 22 Member States: 20 states
   of the EU (AT, BE, CZ, DE, DK, EE, ES,
   FI, FR, IT, GR, HU, IE, LU, NL, PT, PL,
   RO, SE, UK) plus Norway and
   Switzerland.

   Seven other EU states have Cooperation
   Agreements with ESA: Bulgaria,
   Cyprus, Latvia, Lithuania, Malta and
   Slovakia. Discussions are ongoing with
   Croatia.
   Slovenia is an Associate Member.
   Canada takes part in some programmes
   under a long-standing Cooperation
   Agreement.

ESA UNCLASSIFIED - For Official Use
THE EUROPEAN SPACE AGENCY - Basic Procurement Principles of ESA Dr. Karl Eisermann (IPL-PL) Head of the Launchers and HQ Procurement Division ...
ESA budget for 2017: 5.75 B€
   ESA Activities and Programmes
                                                                                       Programmes implemented
CH: 3.8%, 145.1 M€                                            UK: 7.9%, 300.0 M€       for other institutional
  SE: 1.9%, 72.3 M€                                           CA: 0.3%, 13.1 M€        partners
 ES: 4.0%, 151.2 M€                                           SL: 0.1%, 3.4 M€

  RO: 0.8%, 30.0 M€                                            Other: 5.6%, 209.8 M€
                                                                                           Income from the EU:
  PT: 0.5%, 17.0 M€                                            AT: 1.2%, 47.1 M€           86.1%, 1697.9 M€

  PL: 0.9%, 34.6 M€                                           BE: 5.5%, 206.0 M€
                                                                                                  Income from Eumetsat:
 NO: 1.7%, 63.5 M€                                             CZ: 0.9%, 32.7 M€                  9.3%, 182.7 M€

  NL: 1.9%, 72.0 M€                                            DK: 0.8%, 30.5 M€                        Other income:
                                                                                                        4.6%, 90.7 M€
  LU: 0.6%, 22.3 M€                                           EE: 0.1%, 2.5 M€

                                                               FI: 0.5%, 19.4 M€
                                        Total:
IT: 14.6%, 550.0 M€                    3.78 B€                 DE: 22.7%, 858.4 M€

  IE: 0.5%, 17.8 M€
                                                                                              Total:
  HU: 0.2%, 6.2 M€                                                                           1.97 B€

 GR: 0.4%, 14.6 M€

FR: 22.7%, 855.9 M€
                                                 B€: Billion Euro   M€: Million Euro

 ESA UNCLASSIFIED - For Official Use
THE EUROPEAN SPACE AGENCY - Basic Procurement Principles of ESA Dr. Karl Eisermann (IPL-PL) Head of the Launchers and HQ Procurement Division ...
ESA budget for 2017: by domain
     Navigation*
     17.6%, 1,010.8 M€

                                                    Prodex
     Launchers*                                     0.8%, 47.2 M€
     18.9%, 1,088.4 M€
                                                    Space Science
                                                    8.9%, 513.1 M€

                                                    Basic Activities
     B€: Billion Euro                               4.1%, 234.8 M€
     M€: Million Euro                 Budget 2017
                                        5.75 B€
     *includes programmes
     implemented for other
     institutional partners                         Associated with General Budget
                                                    3.9%, 222.3 M€
                                                    Human Spaceflight
                                                    & Robotic Exploration
                                                    11.0%, 633.0 M€
     Earth Observation*
     26.9%, 1,543.3 M€                              Telecom & Integrated Applications*
                                                    5.6%, 319.0 M€
                                                    Technology Support*
     European Cooperating                           2.0%, 114.3 M€
     States Agreements
                                                    Space Situational Awareness
     0.1%, 5.5 M€
                                                    0.3%, 15.1 M€

ESA UNCLASSIFIED - For Official Use
THE EUROPEAN SPACE AGENCY - Basic Procurement Principles of ESA Dr. Karl Eisermann (IPL-PL) Head of the Launchers and HQ Procurement Division ...
ESA Programmes
     All Member States participate (on a      In addition, Member States choose
     GNP basis) in activities relating to     their level of participation in
     space science and a common set of        optional programmes.
     programmes (mandatory
     programmes).                             Optional
       Mandatory                              • Human Spaceflight;
       • General budget: future studies,      • Telecommunications & Integrated
       technological research, education,      Applications;
       common investments (facilities,
                                              • Earth Observation ;
       laboratories, basic infrastructure);
       • Science: solar system science,
                                              • Launchers;
       astronomy and fundamental              • Navigation;
       physics.                               • Robotic Exploration;
                                              • Space Situational Awareness.
ESA UNCLASSIFIED - For Official Use
THE EUROPEAN SPACE AGENCY - Basic Procurement Principles of ESA Dr. Karl Eisermann (IPL-PL) Head of the Launchers and HQ Procurement Division ...
ESA programmes
     •    The programmes are managed under the DG’s authority, in accordance
           with ESA rules and regulations and with each programme’s
           Implementing Rules;
     •    Major programmatic decisions are taken by the Participating States in
          Programme Boards, which are expressly mandated by the Council:
                 JCB – Telecommunications;
                 PB-EO - Earth Observation;
                 PB-LAU – Launchers;
                 PB-HME - Human Space Flight, Microgravity and Exploration;
                 PB-NAV – Navigation;
                 PB-SSA – Space Situational Awareness;
                 IPC – Industrial Policy Committee (functions as PB for Technology Programmes).

ESA UNCLASSIFIED - For Official Use
THE EUROPEAN SPACE AGENCY - Basic Procurement Principles of ESA Dr. Karl Eisermann (IPL-PL) Head of the Launchers and HQ Procurement Division ...
ESA directors
                                                                                            Director General
                                                                                            Jan Woerner
PROGRAMME AREAS

                   Earth Observation            Galileo &                    Telecomms             Science                         Human Spaceflight             Space
                                                Navigation-related           & Integrated                                          & Robotic                     Transportation
                                                Activities                   Applications                                          Exploration

                   Josef                        Paul                         Magali                Alvaro Giménez                  David                         Daniel
                   Aschbacher                   Verhoef                      Vaissiere             Cañete                          Parker                        Neuenschwander

                  SPACE                                                                           SPACE SCIENCE
                  APPLICATIONS                                                                    & EXPLORATION

                                  Technology,                   Operations                                                                       Internal Services
SUPPORT AREAS

                                                                                                                   Industry
                                  Engineering                                                                      Procurement
                                  & Quality                                                                        & Legal Services

                                  Franco                        Rolf                                               Eric Morel                    Jean Max
                                  Ongaro                        Densing                                            De Westgaver                  Puech

                                 TECHNICAL
                                                                                                                  ADMINISTRATION
                                 SUPPORT

       ESA UNCLASSIFIED - For Official Use
THE EUROPEAN SPACE AGENCY - Basic Procurement Principles of ESA Dr. Karl Eisermann (IPL-PL) Head of the Launchers and HQ Procurement Division ...
ESA’s electronic tendering systems (ESA’s view)

                     esa-star                                 EMITS                                         esa-star
      Entity                       Tender                     Publish                    Receive              Support
                                                                                                                                  Reporting
    Registration                 Preparation                Information                Information           Evaluation

                                 TEB & TEP                  IITT’s & ITT’s                 Receive                                 External
  Entity Registration                                                                                      Secrecy Forms
                                 Nomination                   Publication                 Proposals                               Reporting
                                                                                                                              (Dashboard showing
    DB Validation &            Tender Package              Expressions of                 Receive                               ongoing tender
                                                                                        Clarification      Access to Offers
       Update                    Preparation                  Interest                                                             actions)
                                                                                         Requests
                                                                                                           Clarifications &
    Access Rights              Best Practices               Clarifications
                                                                                          Receive            Extensions       Internal Reporting
                                                                                         Extension          Management          (Detailed status,
      Two-Step                                             Best Practices                Requests                                 configurable
     Registration                                      (Tenders published on behalf                                                searches,
                                                                                       The three above       TOB Report
      Procedure
                                                             of third parties)                                                     reports &
                                                                                      functions, but for                           statistics)
      Originally Available Function EMITS  esa-star
                                                         News, Documents,              “Best Practices”
                                                          Standards, etc.                                   Offer Analysis
      Originally Available Function EMITS  EMITS
                                                            Restricted
      Function added to EMITS through esa-star          Competition ITT’s                                    TEB Report
      Function made available through esa-star          Direct Negotiation
                                                              RFQ’s
ESA UNCLASSIFIED - For Official Use
Procurement
         The             Principles
             ESA Procurement Policy - I

  •     The Procurement Policy is approved by the Industrial Policy Committee;

  •     In principle, contracts are placed following open competition. The Agency also
        implements geographical return, i.e., the amount it invests in Member States through
        the placing of industrial contracts for space programmes and activities is more or less
        equivalent to their financial contribution;

  •     These rules are given - or referred to - in the ITT package and are designed to achieve
        the following objectives:
                  Technical quality & value for money;
                  Fairness and impartiality;
                  Industrial policy.

ESA UNCLASSIFIED - For Official Use
The ESA Procurement
       Technical            Policy for
                 Quality & Value    - II Money
   •     With respect to technical quality, it should be underlined that ESA:

             Is a technically-oriented organisation and strives to achieve technical excellence
                 by:
                   Setting detailed technical requirements;
                   Assessing the proposed technical approach in detail;
                   Deploying the most highly-qualified technical experts to perform the
                  assessment;
                   Monitoring activity with the same level of expertise;
                   Accepting deliverables against the abovementioned strict requirements.

             When making the final recommendation the TEB considers “value for money”.
                 Thus, price is considered in the decision-making process for taking the award
                 decision.

ESA UNCLASSIFIED - For Official Use
Fairness and Impartiality
        The ESA Procurement Policy - III
         The Tender Evaluation Board (TEB)
          •    A TEB is appointed for all ITT’s and major RFQ’s;

          •    Composition:
                      Technical experts from concerned fields;
                      Legal/commercial expertise.

          •    In order to secure the Board’s independence and objectivity:
                       Its composition represents a balance of participants from
                        within and outside the initiating department;
                       All are appointed in their own capacity and do not report to
                        their hierarchy in performing TEB activities;
                       All TEB participants sign secrecy forms and a statement of
                        non-interest.
ESA UNCLASSIFIED - For Official Use
Fairness
        The ESA and Impartiality
                Procurement Policy–-TEB
                                     IV Evaluation
         Process
   •     The TEB reviews and approves the ITT package, seeking:
                    The quality and objectivity of the requirements;
                    The fairness of the competition.
   •     The TEB further:
                    Evaluates the proposals against the evaluation criteria published with
                     the ITT. No comparison between proposals is made. Only information
                     provided in the proposal itself is considered;
                    Ranks the proposals received by applying the weighting factors
                     established by the TEB prior to ITT issue;
                    Recommends a company for contract award. Depending on the
                     nature/size of the activity, the decision is taken by the responsible ESA
                     Directors, the Agency’s Adjudication Committee (AC) or the Industrial
                     Policy Committee (IPC).

ESA UNCLASSIFIED - For Official Use
ESA’s industrial policy- I
      About 85% of ESA’s budget is spent on contracts with
      European industry.

      ESA’s industrial policy:
      •    Ensures that Member States get a fair return on their investment;

      •    Improves competitiveness of European industry;

      •    Maintains and develops space technology;

      •    Exploits the advantages of open competitive bidding, except where this would be
           incompatible with objectives of the industrial policy;

      •    Encourages the development of an industrial structure appropriate to market
           requirements, making use of the existing industrial potential of all Member States.

ESA UNCLASSIFIED - For Official Use
ESA’s industrial policy - II
   •     Special clauses for particular types of economic operators:
                    “C1”: Activities reserved to Non-Primes and SME’s;
                    “C2”: Activities subject to subcontracting clause in favour of Non-Primes and
                     SME’s;
                    “C3”: Activities restricted to SME’s and R&D organisations;
                    “C4”: Activities with sub-contracting clause to SME’s only.

   •     Special measures for under-returned countries (whenever needed).

ESA UNCLASSIFIED - For Official Use
Equitable Work Distribution
            •  Code of Best Practices:
            A set of procurement rules ensuring fairness in the selection of
            subcontractors by primes in ESA’s major procurements.

            •  EMITS for external entities:
            ITT’s issued by external entities (e.g., a prime contractor for a major
            project) are published on EMITS to ensure full transparency and visibility.

            •  The ESA Industrial Ombudsman:
            Mediates in disputes between industry in the frame of ESA project
            procurements and technology development procurements.

ESA UNCLASSIFIED - For Official Use
A few things to keep in mind - I

       •    Review EMITS IITT’s and ITT’s regularly;

       •    Do not hesitate to contact ESA if you have questions regarding planned
            ITT’s (IITT’s): this is allowed until the actual ITT is issued;

       •    Pay special attention to the special clauses C1-C4 and also to
            announcements made on EMITS under “Entities”;

       •    Communicate your interest, via EMITS, to participate in the
            corresponding ITT’s;

       •    Contact potential partners identified via EMITS.

ESA UNCLASSIFIED - For Official Use
A few things to keep in mind - II

      •      Try to acquire and maintain an up-to-date knowledge of ESA’s
             programmes, activities, organisation and methods of operation;

      •     Award of ESA contracts requires:
                       High quality proposals;
                       The tenderer’s full attention, understanding and
                        responsiveness to all of the ITT requirements (not only technical
                        but also formal, administrative, legal, industrial policy, etc.).

      •     Request a briefing following an unsuccessful proposal submission: this will
            help to improve the quality of subsequent proposals.

ESA UNCLASSIFIED - For Official Use
Basic Principles of the General Clauses and
 Conditions
  Liability during execution of the contract (clause 18)

  •    A cross-waiver of liability has been introduced;
  •    Gross-negligence and wilful misconduct are excluded from the cross-waiver;
  •    The contractor is now only liable for damage to its own people and goods and therefore has
       a good overview of the extent of its liability, irrespective of fault/negligence of the other
       party;
  •    Deliverables are excluded from the cross-waiver; the contractor’s liability for those is
       capped at the contract price;
  •    Customer furnished items and items made available are excluded from the cross-waiver;
       the contractor’s liability is capped at the value agreed in the contract.

ESA UNCLASSIFIED - For Official Use
Basic Principles of the General Clauses and
 Conditions
 Warranty

 Under the old GCC:
 • The warranty period was one year from delivery;
 • No distinction was made between flight and non-flight items;
 • No detail of the content of the warranty was given.

 Considerations:
 • Driven by EU law, the national legal systems of the ESA Member States changed
   their approach to the warranty in recent years. ESA sought to align its provisions
   with their approach.
 • Previously, ESA did the integration itself. Today, integration is part of the
   contractor’s tasks. The requirements of the warranty therefore differ from a
   situation whereby only individual parts are delivered. Thus, ESA sought to adapt
   its provisions to its business needs of today.
ESA UNCLASSIFIED - For Official Use
Basic Principles of the General Clauses and
 Conditions
 Solution provided by the new GCC in clause 22:

 •    Distinction between flight and non-flight items;
 •    For all procurements:
                •    Deliverable flight items:
                           •    At least one year from acceptance or until lift-off; whichever is
                                earlier.
                •    Deliverable non-flight items:
                           •    At least one year from acceptance.
                •    Post-launch warranty is regulated in the contract on a case-by-case
                     basis.

ESA UNCLASSIFIED - For Official Use
Basic Principles of the General Clauses
  and Conditions
  Import/Export Licences I (clause 15.3)
  •    Clause 15.3.1:
  Prime contractor’s obligation: timely acquisition of all import/export licences and authorisations
  relating to the deliverable items (results-based obligation).

  •    Clause 15.3.2:
  Prime contractor’s obligation: timely conformance to the procedure (no obligation to acquire licenses):
                 •    Contract performance dependent on non-ESA Member State source(s) agreed in the
                      contract;
                 •    Unforeseeable change in export/import control legislation or application;
                 •    Denial or revocation of export/import control licenses/authorisations for reasons other
                      than the contractor’s failure to comply with the conditions of the license/authorisation.

ESA UNCLASSIFIED - For Official Use
Basic Principles of the General Clauses
 and Conditions

 Import/Export Licences II (clause 15.3)

 •    Non-acquisition of the license/authorisation in a case foreseen in clause 15.3.2 shall be
      considered as Force Majeure and regulated as such under the GCC (every party bears its
      own costs).

 •    Clause 15.3.5:
                  Mandatory flow-down to sub-contractors.

ESA UNCLASSIFIED - For Official Use
Basic Principles of the General Clauses and
 Conditions
  Penalties (clause 17)

  •    The GCC foresee payment of a penalty for late delivery. In addition, the contract may
       include a performance-related penalty scheme i.e., the contractor becomes liable to a
       penalty if it does not fulfil certain performance parameters.

  •    The principle of an incentive scheme in connection with a penalty scheme has been
       introduced.

ESA UNCLASSIFIED - For Official Use
Basic Principles of the General Clauses and
 Conditions
 Force Majeure (clause 14)

 •    The GCC define what is to be understood as a Force Majeure event and describe
      the procedure which needs to be followed by the parties in such an event.
 •    Consequences of Force Majeure:
             The parties are excused from the performance of their obligations under
               the contract from the time the Force Majeure event occurred, evidenced
               as required in the GCC.
             Each party bears its own cost incurred due to the Force Majeure event.
 •    The Agency reserves the right either to terminate the contract or re-negotiate its
      terms with the contractor.

ESA UNCLASSIFIED - For Official Use
Basic Principles of the General Clauses and
 Conditions
 Termination (clauses 32, 33)

 •    The Agency’s termination right for fault of the contractor is linked to performance
      of the contract and is not linked to the programme in general;

 •    In the frame of a firm fixed price contract, the contractor keeps the amounts
      already paid for achieved milestones, if any, except for advance payments;

 •    The overall liability of the contractor in case of termination for fault does not
      exceed the contract price (except for gross negligence and wilful misconduct);

 •    The right of termination due to Force Majeure has been introduced.
ESA UNCLASSIFIED - For Official Use
Basic Principles of the General Clauses and
 Conditions
  Intellectual property rights (IPR) regime: contractual licensing scheme
  (clause 41)

  Rule 1: IPR resulting from an ESA contract used for the Agency‘s Own Requirements
  are freely available to the Agency, Participating States and Persons and Bodies.

  Rule 2: IPR resulting from an ESA contract, which are used for a national public
  programme, are available under favourable conditions to Participating States and
  Persons and Bodies.

  Rule 3: IPR resulting from an ESA contract, which will be used for other purposes
  (i.e., commercially), is available under market conditions to any third party.

  The Contractor may refuse to give a licence, if the access and/or use by the third
  party is contrary to its legitimate commercial interest.

ESA UNCLASSIFIED - For Official Use
Basic Principles of the General Clauses and
 Conditions

 Background IPR (clause 43)

 •    Background IP remains the property of the owning party;

 •    The Agency shall have access to background IP owned by the contractor for the Agency
      project specified in the contract;

 •    In that case, the contractor shall grant the Agency an irrevocable, free, world wide licence
      to enable the Agency to use and modify any product, application or result of the contract
      for that project.

ESA UNCLASSIFIED - For Official Use
Basic Principles of the General Clauses and
           Conditions: Background IPR (clause 43)

                                      ESA science programme
                     Contractor A                            Agency
                                          Free of charge
                                          for the project
                                          specified in the
                                          contract

ESA UNCLASSIFIED - For Official Use
Basic Principles of the General Clauses and
           Conditions: Background IPR (clause 43)

        ESA science programme                        ESA manned space programme
                                                            To any third
                     Contractor A                           party: e.g.,
                                                            Contractor B

                                      Market rate, if not
                                      contrary to the
                                      contractor’s legitimate
ESA UNCLASSIFIED - For Official Use   commercial interest
Thank you very much                 Questions?
  for your attention!

ESA UNCLASSIFIED - For Official Use
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