- Introduction
- The contract in brief
- What is required to participate in a public tender
- Potential problems to be faced in a procurement contract
- Studio Cappuccio's support for companies participating in public tenders
Introduction
Such companies are wont to report problems with this type of contract.
In particular, as we shall see, The issue of non-payment appears to be one of the most pressing, but it is not the only one.
Within this in-depth study, we will initially assess the issues that may exist within a procurement contract.
Next, we will consider how a forensic accountant can provide assistance and advice to an enterprise that intends:
- working with public administration bodies;
- participate in public tenders, assessing every possible potentially unlawful aspect.
The contract in brief
Moreover, such a contract may include clauses on the responsibilities, obligations and rights of the two parties involved.
There are several types of procurement contracts, including a:
- bodyThe contractor undertakes to provide specific goods or services, defined in detail in the contract.
- measureThe contractor undertakes to supply goods or services according to specific quantities or measurements, which may vary during the performance of the contract.
- price per bodyThe contractor undertakes to supply specific goods or services at a fixed price stipulated in the contract.
- price to measureThe contractor undertakes to supply goods or services according to specific quantities or measurements at a variable price stipulated in the contract.
Contracting is often used in the construction field, for the realisation of public or private worksbut can also be used in other areas, such as for the purchase of goods or services by a company or public body.
What is required to participate in a public tender
To participate in public tenders, companies must fulfil certain requirements and follow a specific procedure, which varies depending on the country and the type of contract.
In general, in order to participate in public tenders, companies must:
- be registered in the commercial register and have a registered office in the country where the contract is to be performed;
- possess the necessary technical and professional capacity to carry out the work or provide the goods or services requested;
- have a sound financial situation and prove that they have the economic and financial resources to perform the contract;
- comply with safety and environmental protection regulations;
- be up to date with the payment of taxes and social security contributions.
Companies interested in participating in public contracts must submit a formal offer, in which they indicate the prices and conditions for the performance of the contract.
The public body issuing the invitation to tender evaluates the tenders received and awards the contract to the company submitting the most advantageous offer, based on criteria laid down by law.
Potential problems to be faced in a procurement contract
A company wishing to work with public administration bodies, and thus participate in public procurement, could encounter various problemsonce a contract has been concluded.
Here are some of the most interesting ones:
- financial risksThe company may have difficulty in obtaining the financing necessary for the execution of the contract or in dealing with unforeseen expenses that may occur during the execution of the contract.
- risks of non-paymentThe client could fail to meet its payment obligations under the contract, causing financial problems for the company.
- modifications of contractual conditionsThe client could change the contractual conditions without the consent of the company, causing disagreements between the parties.
- litigation risksthe company could get into a dispute with the client over the interpretation of contractual clauses or their application, with the risk of facing costly legal action.
To prevent these disputes, it is important that the contract is drafted in a clear and detailed manner:
- specifying all conditions and modalities for the execution of the contract;
- providing for dispute resolution clauses.
In addition, it is important that both parties respect their commitments and that there is good communication and collaboration between them.
Unfortunately, these assumptions often remain unfulfilled.
As we have seen, a very pressing issue, which concerns many companies that have turned to the Studio Cappuccio in Romeis the one on non-payment.
How to guard against the risk of late or non-payment
Late payment in public procurement can be a very serious problem for companiesas it can cause financial difficulties and even reputational damage.
To defend themselves against late payment, companies can rely on several measures:
- ensure that the contract is well drafted and contains specific clauses on paymentssuch as payment deadlines and penalties for delay;
- keep accurate records of work performed and documents submitted to the clientso that it can prove the fulfilment of its obligations;
- use alternative dispute resolution toolssuch as the mediation or arbitration, to resolve disagreements quickly and efficiently.
If the delay in payment is due to reasons attributable to the client, companies may resort to legal action to obtain compensation for the damage suffered.
How a forensic accountant can help in practice in these cases
A forensic accountant can protect a company that signs a contract and claims it has not been correctly paid by the client or complains about late payments:
- verifying the correctness of payments made by the clientby comparing the invoices issued by the company with the payment documents received from the client;
- assisting the company in negotiating with the clientto try to solve the problem of non-payment or late payment in an amicable manner.
If negotiations with the client are unsuccessful, the forensic accountant may advise the company to resort to alternative dispute resolution instrumentssuch as mediation or arbitration, to try to solve the problem quickly and efficiently.
As a last resort, if the problem cannot be solved by other means, the forensic accountant can advise the company to take legal action to obtain compensation for the damage suffered.
Studio Cappuccio's support for companies participating in public tenders
For companies working with public administration bodies and participating in public tenders, it is important to use an experienced consultant, to
- avoid mistakes in the preparation of documentation,
- properly regulate relations with contracting authorities.
Studio Cappuccio in Rome offers a wide range of legal advisory services for public procurement, including:
- drafting the documentation required to participate in tenderssuch as the business plan and the security plan;
- understanding of public procurement regulations and proceduresso that they can participate properly and in accordance with the law;
- providing support in the negotiation of the contract with the public procurerto ensure that the conditions are fair and advantageous for the company.
- assisting the company in managing relations with the client during the execution of the works, to avoid any disagreements or delays in payment.
- management of any disputes or disagreements that may arise during the course of the work, through the use of specialised expertise aimed at establishing the presence and nature of any contractual discrepancies not properly agreed upon.
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