Regulaton & Policy
New EU Procurement Directives: Are We Ready for More Negotiation

One of the notable aspects of the new EU Directives is a greater focus on negotiation, giving buyers the opportunity to use it to deliver value for money. There are more and broader justifications for its use and these justifications apply equally to competitive dialogue and the new competitive procedure with negotiation. So the allowable reasons for using these procedures include:

  • Where needs cannot be met without adaptation of readily available solutions (new justification)
  • Where the contract includes design or innovative solutions (new justification)
  • Where the requirement is complex in nature, in its legal and financial make-up or because of its risks (extended version of the current justification for competitive dialogue)
  • Where the technical specifications cannot be established with sufficient precision (as current “negotiated procedure with a call for competition”)
  • In the case of unacceptable/irregular tenders (as current “negotiated procedure with a call for competition”)

However, there are some constraints:

  • the minimum number of bidders to be invited is three
  • the authority must indicate (and cannot change) minimum requirements and award criteria
  • the authority must negotiate with those suppliers submitting initial offers (unless it reserves the right to accept tenders without further negotiation)
  • the authority must seek a final tender from suppliers following completion of the negotiations, but it is possible to hold the negotiation in stages and reduce the number of bidders at the end of a stage

And of course the over-arching treaty principles of equal treatment and transparency must be observed. But within that, “negotiations should aim at improving the tenders so as to allow contracting authorities to buy works, supplies and services perfectly adapted to their specific needs. Negotiations may concern all characteristics of the purchased works, supplies and services including, for instance, quality, quantities, commercial clauses as well as social, environmental and innovative aspects, in so far as they do not constitute minimum requirements.”

The new procedure will have much in common with the current Competitive Dialogue process. What is different is that, in Competitive Dialogue the first phase solutions are developed until the authority considers that it has identified one or more capable of meeting its needs and then seeks to formalise positions in a tender, whereas in the new Competitive Procedure with Negotiation tenders are submitted initially, are then subject to negotiation and then resubmitted to finalise positions. (OK, I think we need to clarify that a bit further at some point)!

The ability to negotiate more will be welcomed by most, and it does give the opportunity for contracting authorities to achieve better value for money. But the big question as far as we’re concerned is this: Do authorities have the skills and capability to make use of these new opportunities ?

Public procurement people who are used to running tenders as formal processes will not automatically become skilled negotiators. A different skill set is needed, and we doubt that most public procurement practitioners have those skills, to be honest.

So we need to see some serious thought going into how these skills can be developed. We won’t see every buyer in the public sector becoming the world’s greatest negotiator, but if the new directives are to be exploited successfully, we need to see a reasonable level of negotiation competence widely embedded.

First Voice

  1. Phoenix says:

    I don’t agree that public procurers don’t negotiate in their jobs just because post-tender negotiation is forbidden in the tendering procedure. We negotiate in lots of other ways: as part of the contract management or supplier relationship management process, when addressing under-performance or when resolving other problems. Negotiation skills also come to the fore when dealing with internal stakeholder issues. In fact I can think of far more occasions when we negotiate outside the competitive process than within it!

    I fear this is just more fuel for the lazy assumption that because of a few rules, public procurers are less imaginative, less entrepreneurial, less technically proficient than our colleagues elsewhere. On the contrary, I believe our shackles mean we have to be more skilled and more adventurous to be truly effective.