Procurement of translation services

1. Why are tenders cancelled?
2. The legal framework
3. Technical specifications
4. Conditions for participation (eligibility criteria)

5. Evaluation criteria

UPPS/SATC is studying procurement procedures used in Serbia.

This concerns first of all public procurement, since public institutions must apply procedures governed by law. Indirectly, it also concerns private sector procurement, since modern limited companies have their own procedures, and are as concerned as the taxpayer to obtain the best value for money. Often, they look to the public sector for rigorous methods that can help with this.
Unfortunately, they will not find them there – at least not yet. What we observe is that almost no public tenders for translation services are well designed to procure quality services, and that almost all of them contravene important principles laid down in the law on public procurement.

EU tenders for translation services are often decided 60/40 or 70/30 quality/price. The quality section takes into account many things: QA systems, MIS, DMS, equipment, software including CAT, security and confidentiality, selection procedure for translators, translator contracts, peak load procedures, etc. Framework contracts are sometimes used, whereby a number of the best bidders are contracted and work is distributed in such a way that those providing consistently good results receive more assignments.

Serbian procurement in practice is mostly based on price-only tenders, with references, or even lists of available individual free-lancers used as conditions to bid. The conditions are often a blunt instrument that excludes competent bidders and translators. The exclusive focus on price favours bidders with little or no infrastructure who cannot provide reliable quality.

Some aspects of a typical tender dossier are the result of legal or regulatory requirements, and some are due to habit, misunderstanding, fear of pioneering change or lacking capacity in tendering or legal expertise. Other problems are a reluctance to cancel a contract with a non-performing contractor or to use the legal opportunity to question the validity of an unusually low offer. In general, there is little understanding of the vital role of the translation management company as opposed to individual translators.

As a result, translation service providers still tend to be “kitchen table” services supplied by poorly-organised or low-capacity providers, with lacking consistency, reliability or confidentiality guarantees and no quality assurance systems.

Many institutions suffer from this situation and struggle to obtain translation of sufficient quality. Sadly, some conclude that effective tendering cannot be made under the law. As a result they use loopholes, ambiguities or forbidden measures in an attempt to ‘set up’ the result for a service provider they trust.

This is a pity, as the current Law on Public Procurement is a good one, as we show below. It is our experience that the Commission for the Protection of Bidders’ Rights provides reasonable decisions. But poor or illegal tendering practice is massively commonplace.

1. Why are tenders cancelled?

As in many European countries today, the organisational set-up for public procurement includes an independent body to which decisions can be appealed. In some countries the courts are considered efficient enough, and in others there is a dedicated commission. In Serbia this is named the Republic Commission for Protection of Bidders’ Rights (in the following: the Commission). The Commission publicises its decisions on its web site (www.kjn.gov.rs/).

In current Serbian practice, public contracting authorities have little experience in preparing tender documentation and many tenders have been cancelled by the Commission. We have taken a look at decisions concerning translation services. In the past year, UPPS/SATC member companies lodged 15 complaints. They do not do this lightly: 14 were upheld by the Commission and only one rejected – because it was submitted a couple of hours late. SATC has made a brief analysis of the decisions that concern translation services. Some of the findings are presented here.

Eligibility conditions – the main cause for cancellation (so far)
Until now, many of the complaints lodged with the Commission have concerned conditions for participation. As a result, most cancellations have been because of authorities’ use of conditions that are unacceptable under the law.

The most common reason for cancellation of a procedure is when a contracting authority (CA) requires bidders to guarantee certain minimum number of permanent staff. They attempt to justify such requirements by claiming that this kind of engagement ensures that the services will be carried out on time and according to specific standards; that such a condition is aimed at favouring serious translation companies with a well-developed personnel and business policy; that it avoids “body shops” that only hire translators on an on-call basis. But this kind of requirement has been assessed as discriminatory by the Commission. It considers such criteria too restrictive to competition among bidders because, in addition to full-time employment, there are other forms of staff engagement that are equally acceptable and allow equally good service performance. In other words, the legal basis of staff engagement does not affect the quality of the service, and it is up to the bidder to organise its business model as it sees fit. The Commission has expressed this opinion in a considerable number of decisions, the latest was issued in Decision no 4-00-210/2015 of 12 February 2015.

The next most commonly observed discriminatory tender condition is related to the definition of references under the bidders’ professional capacities. Some tenders have required references of translation services previously provided to a particular category of contracting authority. For example, it has often been required that references be issued by CAs that are budget users (direct and indirect) or, similarly, that the translation services provided must relate to public sector institutions or to institutions that have as a predominant activity e.g. electricity production. CAs justify such requirements by claiming that state authorities are characterized by a particular intensity and method of communication, and that their needs are different from the needs of any other type of client. The Commission’s opinion, expressed in several decisions, is that for translation services, relevant references are those that confirm experience of the bidder in translating specific material and documentation related to the subject of the public procurement, i.e. that say what kind of experience the bidder has in translating those materials and not to whom the services were provided. According to the Commission, such a requirement in a tender dossier violates the principle of ensuring fair competition referred to in Article 10 of the Law on Public Procurement (e.g. Decision no 4-00-3151/2014, 4-00-210/2015 and 4-00-2932/2015)

Another condition assessed as unjustified is the personnel capacity requirement according to which, besides a qualified translator (with a university degree in specific language and literature) bidders must also engage a permanent court interpreter (Decision no 4-00-2932/2014).

Evaluation criteria
So far, fewer tenders have been cancelled due to discriminatory evaluation criteria. This is because the evaluation criteria used so far are relatively simple. Most are simple price elements, but as CAs tire of poor quality and become more adventurous in their attempts to introduce quality criteria, we can expect more frequent complaints.
In not so few contested tenders the procurement procedure was entirely cancelled because references were included among elements of evaluation criteria. This Commission opinion is based on the interpretation of the Article 85, paragraph 4 of the Law on Public Procurement. This concerns elements that may be the basis of additional requirements for bidding and of evaluation criteria, and the Commission expressed its general legal opinion at the 8th general session (Decision no 4-00-1938/2014).

In addition, the total number of employees cannot be an element of evaluation criteria (Decision no 4-00-3151/2014), and the requirement that a diploma obtained at a Serbian university must be recognized at one of the universities of the country where the language concerned is spoken was evaluated as a violation of the principle of equality of bidders (Decision no 4-00-1556/2013). Another institution asked for number of translators “accredited by translation services of European institutions”, whatever that means.
The requirement that the bidder must be a company registered with the Business Registers Agency, with translation services registered as predominant activity, is not in accordance with the Law on Business Companies. Under that law, registering a predominant activity is for statistical purposes only, and does not constitute any form of operating permission. Such a condition has therefore been evaluated as containing discriminatory elements arising from the classification of business activities performed by the bidder and hence not compliant with Article 12 of the Law on Public Procurement.

In pointing out the most common errors that CAs make when drafting tender dossiers, we hope to help avoid repetition of such errors in public procurement procedures. We are convinced that an effective implementation of tenders and the avoidance of their repeated cancellations are in the mutual interest of both contracting authorities and translation companies.
In the following, we shall further elaborate on the Law on Public Procurement, and how we think it can be used to effectively tender for quality translation services, and obtain best value for taxpayers’ money.
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2. The legal framework

The Law on Public Procurement
The latest Law on Public Procurement is often poorly understood. It is a considerable improvement on the previous one, being less prescriptive than many laws. It clearly shows the principles that must be honoured, for example the Principle of Efficiency and Cost-Effectiveness (Article 9), The Principle of Ensuring Competition (Article 10), the Principle of Equality of Bidders (Article 12). For our purposes, Article 10 is one of the most important. It says that a contracting authority is obliged to facilitate as much competition as possible, that it may not limit competition or prevent any bidder from participating by using discriminatory requirements, technical specifications, or criteria.

At the same time the Law provides a contracting authority with a flexible procedure that can be matched to the specific contract to be signed and the work to be done.
Indeed, the Law requires that the procedure be so matched. Article 70 requires that the technical specifications be described objectively and in a way that ‘meets the needs of the contracting authority’. In other words, they must accurately describe the work to be done. It then says in Article 84 that the criteria for awarding the contract must be logically related to the subject of public procurement, i.e. the technical specifications. The one must fit the other.

The Law defines two award principles – The lowest price and the economically most advantageous offer. In the second case, it specifies (Article 85) that evaluation criteria may include an open range of elements relevant to the subject, and gives some examples.

Conditions for participation are treated under articles 75 and 76. These articles offer possibilities and are prescriptive only to a small degree. Some issues (e.g. staff quality) are suggested both in Article 76 as a potential condition for participation and in article 85 as a potential evaluation criterion. This suggests that the law intends a flexible approach by which minimum conditions for participation can be set under article 76, and evaluation criteria set under Article 85 that distinguish between bids of varying quality and weight them accordingly. The only restriction seems to be that the same criterion may not be used for both, though different criteria on the same subject appear permitted if they have a sound logic. (The Republic Commission for the Protection of Bidders Rights has interpreted this to mean that References may only be used as conditions, not as evaluation criteria.)

Strategy for the development of public procurement 2014-2018
This Strategy is official government policy and a contracting authority is obliged to respect it. Among other things it supports SMEs: Article 3.2.3 says that in introducing centralisation of public procurement they must take care about possible influences on the participation of SMEs. It encourages contracting authorities to split tenders into lots where possible and reduce administrative limitations, among other things.

What these legal acts mean
In sum the legislation in place requires a contracting authority to:
– provide good value for taxpayer’s money
– ensure competition
– treat all bidders equally
– ensure acceptable conditions for SMEs.

It must do this by:
– accurately describing the work to be done (technical specifications), dividing the work into lots where appropriate
– setting logical, non-discriminatory participation conditions
– setting logical evaluation criteria that are balanced according to the technical specifications
– providing sufficient time.

Below, we take a more detailed look at the various tender elements we have mentioned.
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3. Technical specifications

Article 70 of the Law says that they must ensure that the goods, services or works to be procured, are described objectively and in the way that meets the needs of contracting authority. In other words, the specifications must accurately describe the work to be done.

The tech. specs. form the basis for the eligibility and evaluation criteria. They must be well specified, with a clear description of each task to be performed, an indication of the quality level required, and of the relative volumes of the various tasks expected.

Not being sure of the balance of work between, say, English and French translation is no excuse for no specification – the contracting authority can for example quote the annual balance between these items for the last 3 years, or at least make an estimate, and usually quite accurately.

The technical specifications should accurately describe the likely demand for various elements such as different languages, or to what degree oral translation is to be simultaneous or consecutive. If translation from Hebrew will not been used, it should not figure in the specs; if oral interpretation has only been used once in the last year (a typical situation), it must be made clear that this task is a rare one.

The volume of a particular service helps to determine prices offered for that service. For the prices to be meaningful, the respective volumes of different services gathered in the same lot must be reasonably well estimated. It is only on this basis that reasonable and proportional evaluation criteria can be designed.

Often, a tender combines quite different tasks, such as oral interpretation and written translation. In such cases, there is a special responsibility to define in the technical specifications the balance in workload between the two. If this is not done correctly, it will be impossible to provide logical weighting among various evaluation criteria (see below), opening the tender to speculative bidding and leaving a result that does not reflect best value for taxpayers’ money.

If the contracting authority does not know beforehand what balance there will be between interpretation and translation, then the work should be split into two lots. This is then the only way to ensure fair competition and obtain a meaningful result, i.e. to comply with the Law. Given their substantially different nature, practice and pricing, we recommend that interpretation and translation always be the subject of different lots, unless there is a specific reason to combine them.

Concerning quality, Article 70 also says: “In case of procurement of goods and services, technical specifications determine characteristics of goods and services such as the dimensions, level of quality, including methods for quality assurance, …”. While the quality of a translation can be difficult to describe or measure, the quality of the translation process is not. QA methods, Management Information Systems, Document Management Systems, are all relevant. Indeed the European Translation standard EN15038 provides a good check list.

Quality levels may thus be specified, but to do so, a contracting authority must ensure that it has sufficient expertise in the subject, so as to make appropriate, well-balanced specifications at the level required.

Other important factors should be defined in the technical specifications. Deadlines for delivery should be set, with reasonable times that correspond to the time a good translator needs to complete a given task. Urgent tasks should also be defined. In the case of large documents that require splitting between translators, lower coherence of terminology must be accepted, or time given to carry out a revision by a single translator (revision being a separate task from translation).

Technical specifications should always be made by a person that understands the profession well, and the translation services should be designed according to the specific needs of the task. This often involves several stages: translation, revision, professional review, editing, proofreading, formatting, etc. A contracting authority should request a comprehensive set of the services it may possibly need. If some services are rarely needed, this should be stated. Evaluation points for little-used services do not need to be assigned, the contracting authority can itself set a price as a percentage of another element of the price offer. In fact, authorities frequently need professional review and editing and the possibility of performing them should always be present in the contract. In this way conditions are established for such services to be ordered, carried out and billed legally.
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4. Conditions for participation (eligibility criteria)

Article 75 of the Law states the mandatory requirements, i.e that a bidder is properly registered, it or its legal representative have no criminal convictions, it is not prevented from economic activity and it has paid its taxes.

Article 76 provides for additional requirements, “in such way so as not to discriminate between bidders and to be logically related to the subject of public procurement”.

These requirements may cover “financial, operational, technical and personnel capacities whenever it is necessary having in mind the subject of public procurement”.

Financial requirements may be used if they are logically related to the technical specifications For example, a certain turnover for the last 3 years can be an indicator of capacity for a large contract. A bank guarantee (at the contracting stage) may be requested for a particularly large contract, though its size may not be disproportionate to the job.

Often, the additional requirements used concern technical capacities in the form of references (see also special section on references below). The references required must be relevant and not too narrowly defined so as to hinder competition. A contracting authority that defines in its technical specifications a contract to translate scientific papers, for example, may ask for references in translation of scientific documents. It may not ask for such references e.g. “from an establishment of higher education”, or “from state institutions”, since the client is irrelevant.

The additional requirements may refer to a minimum number of staff, but only if this is clearly necessary. For example, for a contract described in the technical specifications as requiring the translation of 30,000 pages in 6 months, it may be reasonable to require at least 3 full-time translation project managers (not linguists since management is the key issue), whereas a less demanding contract may not. Apart from such a basic requirement, it may not distinguish between permanent and non-permanent staff, since companies manage their human resources in many ways.

As we saw above, quality standards may be defined in the technical specifications and may therefore be used both in eligibility and evaluation criteria. However, care must be taken not to make them too restrictive, so that a reasonable number of bidders can fulfil them.

Bad eligibility criteria
Setting unreasonable conditions is the most common malpractice we observe: participation conditions that favour one bidder, or unreasonably restrict the number of companies that can bid, in violation of article 10 of the Law. Some of the unreasonable conditions we have observed include:

A specified number of translators as permanent staff – as long as the bidder has sufficient translation management staff to deal with the contract, the contractual relationship with its translators is irrelevant.

Number of translators offered – since most companies rely on free-lance translators of whom there is a very large pool, any statement can be made in answer to this, but none can be verified.
A specified number of translators “with membership of a particular translator’s association”. This is irrelevant to the company’s (or the translator’s) ability to perform.

Over-specified conditions – e.g. one faculty asked for an Italian translator with a doctor’s degree from a specific Italian university; another institution asked for number of translators “accredited by translation services of European institutions”, whatever that means. Both conditions were ruled inadmissible on appeal.

Setting unverifiable conditions also occurs. An unsupported statement that a bidder has a certain capacity is not a suitable condition unless it can be verified (and indeed is verified, see below).

Setting conditions that do not reflect the technical specifications Often, translation and interpretation are tendered together (which may be correct if evaluation points are awarded in proportion to the real value of work, see above). But the tender often asks for interpretation references as a condition, when such services, even when contracted, are rarely requested, as institutions often use their own employees for this. This means that a translation company with all the relevant references for the main job to be done (translation) can be excluded, as they have not been requested interpretation tasks under previous contracts. Interpretation references should therefore only be requested in proportion with the real part of such work in the job to be done. We strongly recommend separating translation and interpretation into different lots (see also above under technical specifications).

References
The subject of references requires particular consideration. In current practice, references are usually requested on specific templates dedicated to the tender in question, meaning they must be obtained anew for every tender. The templates almost always contain the phrase “this reference is issued for the purpose of [this specific] tender and may not be used for any other purpose”.
This means that bidders must in a very short time obtain references for each and every tender, and institutions must issue such references on every occasion. This is unique to Serbia (or perhaps neighbouring countries also) – EU tenders allow proof of experience by any reasonable means. It creates unnecessary work for institutions and is often in conflict with Article 10 of the Law as it can be difficult for bidders to obtain references in time.

The Law on Public Procurement does not specify how a reference must be proved.

Article 77 Paragraph 3 states that: “The proof under Paragraph 1, items 2) to 4) may not be older than two months prior to opening of bids, or, in the case of qualification procedure, prior to updating the list.” Paragraph 1 refers to registration certificates, court statements, tax certificates and licenses. Paragraph 3 does not, however, hold the same two-month requirement for proofs under paragraph 2, which cover professional references.

The Law thus leaves open the age and format of a reference (if once issued and truthful, it is presumably truthful for all time – the only important quality is its ability to be verified). Demanding over-specified references is in conflict not only with Article 10, but also with Article 9, the Principle of Efficiency and Cost-Effectiveness, as it makes unreasonable time demands not only on the bidder, but also on all the institutions that must issue the references.

We therefore recommend that the date of issue and format of references not be specified, so that experience should be provable by any reasonable means that can be verified, and of any age. This should include references previously issued “for the purpose of [another] tender and for no other purpose” as fully acceptable if they prove the relevant professional capacity.
The Law allows for references to be requested “over a period not longer than five years for services” (Article 77, para , 2), (1)). For translation services, five years is a reasonable period for experience to remain relevant. To satisfy Article 10, therefore, a shorter period should not be requested unless there is a good reason why specific circumstances make this necessary. Setting a shorter period with no good justification is discriminatory, in violation of Article 12.

For low-value public procurement (under RSD 3m), the Law also allows professional references to be made as statements, to be verified at a later stage. Article 77 Paragraph 4 allows that fulfillment of all or of some requirements, can be proved by a “bidder’s statement given subject to full criminal and material liability”.

To further satisfy the efficiency demanded by Article 9, we therefore recommend that references be requested in the form of bidder’s statements, with the most advantageous bidder being required to prove the references before signature of contract (a common EU practice). Limiting the number of references to be proved in this way would allow proper examination of the veracity of those references (some bidders often make false statements). However, statements should always be carefully verified before contracting, and those that turn out to be false should trigger serious sanctions (exclusion from this and future tender procedures, even criminal prosecution for egregious cases). The strict verification and the consequences should be made clear at the outset in the tender dossier.
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5. Evaluation criteria

Article 84 of the Law states that evaluation criteria “must be described and weighted, must not be discriminatory, and must be logically related to the subject of public procurement”. This means they must logically reflect the technical specifications.

Conditions for participation may not be the same as elements of the evaluation criteria. The law does not state it, but the Republic Commission for Protection of Bidders’ Rights has interpreted Article 85 paragraph 4 as saying that references may only be used as conditions and not as criteria.

The principle for evaluating bids may be ‘the economically most advantageous bid’, or ‘the lowest price offered’.

In the case of the economically most advantageous bid, the evaluation criteria must be designed “depending on the subject of public procurement”. Some suggestions mentioned in Article 84 include the price, dates and deadlines, “cost effectiveness” (a phrase that itself implies a balance between price, quantity and quality), quality, technical advantages (another form of quality), characteristics of environmental protection and energy efficiency, after-sales service and technical assistance, warranties, number and quality of engaged staff, “functional characteristics”, and last but not least “etc.”. In other words, any criteria may be used as long as they logically relate to the technical specifications, are clear indicators of a bidder’s ability to do the job, are measurable and verifiable and are not themselves conditions for participation.

If there is any possibility that two offers may come to score the same number of points, a reserve criterion should be set, to break the deadlock. Failing this, an otherwise successful tender may have to be annulled.

Some bad evaluation criteria
Capacity in terms of translation pages per day This is frequently seen. Since everyone in the industry knows roughly how many pages a good translator can produce in a day, such a statement is essentially just about the number of translators that can be deployed, and yet any company can find an almost unlimited number of freelancers. Even if a large workload is to be managed in a short time, this statement is irrelevant. It is anyway unverifiable – what is important for capacity is the systematic management approach that the company practices, which is not captured by such a statement.

A price for urgent tasks is often seen, usually without the term ‘urgent’ even being defined. The deadlines should be set out in the technical specifications. In almost every case, all bidders price this at zero, making it irrelevant. It is better that the contracting authority define this price itself, e.g. “A 20% surcharge will be applied for urgent translations as defined in the technical specifications”.

“Number of additional languages offered” has recently been seen. If the technical specifications have defined the languages to be offered, this is irrelevant. If they have not, then they themselves are deficient. Besides, any bidder can of course write whatever number he chooses, since the statement cannot be verified.

Payment deadlines are occasionally used. In fact, these are fixed by law for public sector institutions at 45 days, and are thus irrelevant.

“Number of contracts with international organisations” was also seen on one occasion, and is of course irrelevant.

Games of chance
The evaluation criteria should also be weighted with a logical correspondence to the technical specifications.

Only by researching, then clearly specifying the balance of work expected, and assigning an appropriate balance of points, can serious, correctly priced bids be obtained.

For most contracts with professional institutions, interpretation plays a very small role, since most of the foreign-language work is in English, and most of the staff speak this language quite well enough to hold meetings, make phone calls, etc. Yet many of these institutions weight interpretation much higher than justified. Bidders know this, so they are forced to bid speculatively, placing daft prices such as one dinar or even zero on this task, whose normal market price is around 35-50 euros per hour. They can then raise the price for the major work (e.g. English-Serbian translation) and obtain a better score than a serious bid that gives realistic prices for all elements. The result is a tender that often ends in the worst bidder winning, and the total price for the contract higher than it should be.

The tender is therefore not a test of which company offers the best price, rather of which company has played the guessing game most successfully (or has been informed of the real workload to expect).

In the case of interpretation and translation, we strongly recommend separating translation and interpretation into lots, as the two services are quite different. This goes a long way towards preventing tactical pricing games, and conforms to the Strategy for the Development of Public Procurement. It helps ensure correct prices and best value for money for both services.
There are many other examples of evaluation criteria not corresponding to the actual needs.

Good practice
As mentioned above, the Law defines two award principles – The lowest price and the economically most advantageous offer.

Lowest price
If the lowest price is chosen, the evaluation points may be assigned to price elements only. To comply with the Law, the price elements used should reflect each type of work that may reasonably be expected under the contract. Their weighting should accurately reflect the balance of such services, as described in the technical specifications. For example, if translation from French has constituted 15% of the workload in the previous year (or 3 years), it would be logical to assign to its price 15% of the pricing points. If the contract includes both translation and interpretation, but interpretation was not requested last year, it should carry a vanishingly small number of points, if any. If English-Serbian translation represents 80% of the workload, it should be assigned 80% of the evaluation points; if rarer languages figure in 10% of the workload, the price for a group of rarer languages together may be assigned 10% of the evaluation points.

Grouping languages for pricing in this way should be done by a person who has a good knowledge of the market, since different languages can command quite different prices.

But of course for any purchase, the lowest price rarely corresponds to good quality, and can represent truly bad quality. To win the tender, a bidding company must bid low, meaning that it will have only small funds available to pay translators, and may not be able to engage good, or even competent ones. This principle also favours a bidder with the lowest fixed costs: no effective or secure technical equipment, illegal software, badly-paid translation management staff with no spare capacity to manage peak loads, no document management systems, quality assurance methods or certifications – all of these cost money.

Contracting authorities that use this method should not be surprised if the services delivered are poor.

Economically most advantageous offer
In this option, both price and quality elements may be used, with whatever balance between these two categories the contracting authority wishes. EU tenders often use a quality/price ratio of 70/30 or 60/40. Below 60/40, price tends to dominate, since bidders quickly learn what to provide of quality systems, and the quality points are close for most bidders.
As with lowest price, the price elements must in the same way reflect each type of work, weighted according to that type’s preponderance in the workload according to the technical specifications.

As we noted above, the Law allows many types of quality factor, but they must be carefully designed so as to be good indicators of a bidder’s ability to provide a high quality output. They must also be verifiable, and verified.
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To be continued…

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