5. REGULATIONS

To ensure that procurement activities conducted by the Government or the Armed Forces are so regulated as to be in the best interests of the State, a relatively comprehensive and detailed set of regulations has been produced covering the procedures to be adopted in matters of procurement for the Armed Forces. Moreover, by entering into international agreements, Norway has made commitments relating to public sector purchasing. In some cases this will also have a bearing of defence procurements.

These regulations are to be seen as a set of provisions governing procurement procedures. Under no circumstances, therefore, can these regulations be invoked as forming part of the contract conditions unless this is expressly stated in the contract. This does not, however, prevent suppliers from drawing the attention of the contracting authority to any instance in which they consider that purchasing has not been conducted in accordance with the regulations.

5.1 «Regulations Concerning Government Procurements etc.»

(REFSA) (k-0502)

The publication «Regulations Concerning Government Procurements etc.» constitutes the overriding set of regulations for all government procurement. It covers both the purchasing of goods and services and contracts for building and installation work. The regulations were established by the Royal Decree of 17 March 1978 and have since been revised a number of times, most recently by the Royal Decree of 16 December 1994.

With regard to the purchasing of goods and services the regulations state that, regardless of the method of purchasing employed, every purchase shall be based as far as possible on competitive tendering. Further, the regulations permit three alternative purchasing methods: competitive tendering, negotiated purchasing and direct purchasing. Detailed rules are set out concerning when the different methods of purchasing may be used, how the intended procurements are to be announced and the criteria to be used in the choice of supplier. The principal rule is that purchases should be based on competitive tendering. The regulations also contain provisions for the formulation of contract terms and conditions and supplementary provisions concerning the contract arrangements for research and development work.

The regulations contain similar provisions covering building and installation work except that here there are only two methods of procurement, either by tender competition or by negotiated purchase.

5.2 «Provisions Concerning Procurements for the Armed Forces»

The set of regulations «Provisions Concerning Procurements for the Armed Forces» (BAF) form part of the Service Regulations for the Armed Forces. These regulations in turn are based on «Regulations Concerning Government Procurements etc.» but are more comprehensive and contain detailed provisions for the conduct of procurement for the Armed Forces. BAF was most recently revised by the Royal Decree of 3 December 1993. The Ministry of Defence endorsed Revision 1 of BAF in the notice dated 3 October 1996. BAF covers procurement of technical equipment and ammunition, general stores and provisions together with associated services. It is important to understand, however, that BAF does not cover buildings and installations.

The fundamental principle of the regulations is that any purchase, regardless of the method of procurement, shall be based on competitive tendering where at all possible. This means that all companies in contact with the Armed Forces as potential bidders and suppliers are to be treated fairly and equitably. The regulations also require that any procurement is to be effected in the way that is most advantageous to the government, having regard to the nature of the goods or services involved, in terms of price and all other important considerations.

BAF allows for the use of the same three types of purchasing as those set out in REFSA (see 5.1 above), namely competitive tendering, negotiated purchasing or direct purchasing. Similarly it contains detailed rules for when the different methods of purchasing are to be used, the procurement procedures that are to be followed for each method, how the intended purchase is to be announced, the criteria to be used in the choice of supplier and the formulation of the contract itself. BAF also contains rules for quality assurance and cost control.

BAF contains a number of appendices which include supplementary provisions and forms for use in connection with purchasing. Among the latter, Form 5001 «General contract terms for procurement of materiel» and Form 5005 «General procurement terms» are of particular relevance to potential suppliers of goods or services to the Armed Forces. The most recently revised edition of BAF also contains a new appendix «Ethical guidelines for defence-related procurement».

An English edition of BAF is expected to be ready in autumn 1997. The intention is to publish BAF on the Internet in both Norwegian and English in the near future. Work has also started on a version on CD-ROM.

Copies of BAF are available for sale through HQ Defence Command Norway, Logistics Staff (Combined Materiel Agency), Tel. +47 23 09 65 58.

5.3 Government Procurement Agreement (GPA)

Norway belongs to the World Trade Organisation within which government procurement is governed by the so-called Government Procurement Agreement (GPA). Purchases made by the major Armed Forces procurement agencies are covered by the Agreement. The GPA rules state that goods and services covered by the Agreement shall be procured in accordance with the provisions of the GPA. Detailed rules for announcing intended procurements, criteria for the choice of supplier and announcement of contracts awarded are to be followed for all such procurement. The procurement agencies concerned are the Ministry of Defence, the Army Materiel Command, the Royal Norwegian Navy Materiel Command, the Air Force Materiel Command, the Norwegian Defence Construction Service, the Norwegian Defence Communication and Data Services Administration and the Joint Medical Services.

5.4 The European Economic Area (EEA) Agreement

Since the EEA agreement came into effect in January 1994, government organisations have harmonised their national regulations with the European Union's regulations for public sector procurement. The basic principle is now that all defence purchases above the threshold values will be covered by these regulations. Article 123 of the EEA agreement, in common with Article 223 of the European Union agreement, however, exempts certain categories of defence products. These are products which are exempted for reasons of security or national preparedness.