date/date 27-April-2007 page/page 1 6 The Agency is currently engaged on a reform of its Financial Management, addressing three major domains:

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1 MEMO date/date 27-April-2007 page/page 1 to/à To Whom it may concern Subject/objet Request for Information Financial Management Reform Implementation The Agency is currently engaged on a reform of its Financial Management, addressing three major domains: 1. planning of financial resources and control of project activities in a multi-year perspective; 2. transparency and control of internal costs (the analytical cost accounting dimension); 3. standard financial accounting and reporting (the accrual accounting dimension). As a result of this reform, many of the current Information Systems (IS) will require substantial change or replacement. In order to address this issue, the Agency is planning to acquire an ERP solution which could, in a single and integrated platform, cover for most of the IS needs and, in particular, support the following processes: Strategic planning and reporting processes o Planning (workforce, contract actions, expenditure) o Expenditure Reporting Funding acquisition and monitoring o Funding Management processes o Budget Management Processes Project And Resources management o Project/programme management o Internal services management o Infrastructure/investment management o Third party sales o Procurement Management & administration processes o Financial o Corporate controlling o Industrial Return o Workforce management o HR & Staff administration 1 1 Currently Employee Data, Leave, Recruitment and Payroll processes are implemented on SAP 4.7. a ESRIN Via Galileo Galilei - Casella Postale Frascati - Italy Tel. (39) Fax (39)

2 date/date 27-April-2007 page/page 2 Request for Information In order for the Agency to adequately prepare for the procurement of a ERP solution and their related services, the Agency is searching for ideas in the following areas: 1. Adequacy SAP to address the processes and requirements in scope. 2. Suggested implementation approach 3. Suggested procurement scope 4. Suggested service model for operations and maintenance Adequacy of COTS to Processes and Requirements Although the Agency s Financial Model is under reform, a number of current features are known to be critical and/or specific to the Agency. Q1: Could the following processes be covered by a standard SAP implementation without software development? Q1.1 Procurement in large development contracts The Agency procures large space systems through long (5-15 years) and layered (up to -7 levels of sub-contractors) contracts. By its size and nature these contracts may be affected by hundreds of formal Contract Changes, which may re-define deliverables, schedules and payments. Most of the Agency s budget is spent on this type of contracts; hence, the accurate management is critical. Generally, the Agency keeps a direct contractual relation with the Prime Contractor but pays directly many sub-contractors for their tasks. In some cases, sub-contractors are paid in different currencies. Q1.2 Geographical return computation The Agency has to maintain accurate records on the geographical distribution of its expenditure; that is, track the work being performed in each country. This tracking process goes down to all sub-contractor levels and takes into account the nature of the activities contracted, regardless these sub-contractors are paid by the Agency or not. Q1.3 Annual Budget expressed in CA and PA The Agency operates with an annual budget, defined as an expenditure ceiling, known as Payment Appropriation (PA). However, in order to allow for the procurement of multiyear projects, the budget includes also a ceiling for the value of contracts/orders which can be issued on that year; this is known as Contract Authority (CA). Hence, the annual budget is composed of a CA and a PA value per activity. Funds (CA and PA) can be transferred during the year from one ESA Programme to the other.

3 date/date 27-April-2007 page/page 3 Q1.4 Management of Member State contributions The Agency is funded primarily by the contributions of its Member States. Annual contributions are approved in the annual budget and they are called-up ( invoiced ) to Member States during the course of the year. Q1.5 Optional Programmes Most of the Agency programmes are optional, meaning that Member States contribute to an agreed share of the programme cost envelope (Programme Declaration). The Agency has to ensure that the Programme is concluded within the cost envelop and that each Participating Member State contributes (over the several annual budgets) to their agreed share and that any geographical return objectives of the programme are also met. The Agency in the execution of its multi-annual Programmes and Projects make commitments with industry. These commitments are recorded, cumulated and compared to the overall cost at completion and envelope of the Programme/project. Q1. Long-Term Planning The Agency is planning on 10 years horizon, the financial resources that are necessary to run the activities. The Long-Term Plan translates into yearly contract authority and payment appropriation (CA and PA) which translates into contributions that will be apportioned by Member states. This planning is composed of the Agency Programmes with a Cost at Completion already approved by Participating Member States and to future not yet approved activities. Q1.7 VAT re-imbursement The activities of the Agency are exempted from VAT; hence, a process is set-up to recover any VAT paid Member States. Q1.8 Multi-currency operations Even of Euro is the primary currency for ESA operations (booking currency); ESA operates, procures, receives income and holds accounts in different currencies. Q1.9 Management of investments and capitalisation of assets The Agency makes in-house corporate investments that are of common use to many Programmes and investments that are financed by Programmes funds. Assets are not accounted for in the current cash-budgeting system. In moving to accrual accounting, these investments costs will in the future be capitalised and accounted as assets. There are today thousands of assets that are funded through various sources and the Agency needs to keep track of the assets funding sources.

4 date/date 27-April-2007 page/page 4 Implementation Approach Considering the large scope of the project and potential risks for business continuity, a prudent and phased implementation approach seems adequate, however, in view of the interdependence of many the of the underline processes; it is not clear to us which approach is most convenient. Your input would be most welcome on the following aspects: Q2: What is feasible to gradually implement and release in such ERP solution? Which are the most frequent approaches in relation to the processes listed in the introduction? Q3: What are the minimum modules that are necessary to implement in order to manage properly the following processes? - Cost accounting (planning of budget per cost centres, controlling of costs) - General accounting (accrual accounting) - Assets management - Accounts payables, Accounts Receivables - Management of member states fundings (annual and multi-year contributions) Q4: Which criteria could be used to select between replacement or interfacing legacy system? Which modality of interface with legacy systems are to be favoured? Are specific consideration relevant for interim solutions (in the context of a sliced development)? Q5: What special considerations should be made for the introduction of the datawarehouse and workflow functionalities (both currently covered by legacy)? Q: Which policy for the development of add-on s? Should these be within SAP or it is better to develop and interface external applications? Q7: Bearing in mind that most ESA project activities are procured in large development contracts, to which extend is it convenient to manage Project Management within SAP or to interface an external tool such as MS-Project? Procurement Scope The System could be procured at once or through multiple parts/slices. Also, the services associated to System could be procurement together. Q8: Is it adequate to procure the services of the solution integrator together with: a. the SAP licences? b. the server platform? Which could be the benefits?

5 date/date 27-April-2007 page/page 5 Q9: Could you provide models of relevant terms and conditions for contracts regarding the solution implementation, licensing and operations of such a SAP-based System? Service Model The Agency normally procures IS solutions which are then transferred for operations and maintenance (and continuous improvement) to dedicated selected provider(s). Q10: What would be the pros/cons to have the System operated by the integrator? Is that commonly done? If so, for how long? We would appreciate receiving your replies and the information you can provide us with by the latest 25 May Could you please provide a cover letter in which points Q1 to Q10 are addressed and limit any further documentation, in particular avoid standard commercial documents. Your replies and any resulting exchange of information with you will be treated as commercial in confidence by the Agency. Thank you for your collaboration and we look forward to hearing from you, Yours Faithfully P. Soerensen Head of the Management Information Systems Division Cover letter and documentation should be sent (preferably in electronic PDF format) to: Sara.Pancotti@esa.int with copy to: Sergio.Benetti@esa.int Or alternatively hardcopy via surface mail to: Ms Sara Pancotti ESRIN Via Galileo Galilei snc Frascati (RM) ITALY

6 date/date 27-April-2007 page/page Disclaimer The Agency is free to use the information provided by the potential bidders only within the scope of the Invitation To Tender preparation In no case the information provided by the potential bidders will be considered for the evaluation and selection of the winning bid. The evaluation and selection will be performed only on bidder s proposal base upon the issue of a formal ESA Invitation To Tender. The Request For Information and the information provided by the potential bidders do no bind the Agency in any way to place a contract.

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