The 2014 EU Procurement Directives, soon to be implemented here in the UK, bring with them many changes essential for everyone involved in the procurement process to understand. The two most important, in our opinion, being that the directives support Preliminary Market Engagement (PME), as we wrote about at length in a recent article, and a brand new addition to the list of procurement procedure options – Competitive Procedure with Negotiation (CPN).
CPN is an incredibly useful new procedure that we at BPG feel will considerably aid the procurement process for any complex project, ensuring that all concerned are focused on correct pricing, considered objectives and fairer bidding. This is our introduction to the whys and wherefores of this new procedure.
The Negotiated Procedure is one that you may not have used, and it certainly was the least utilised of all the procedure options. This was partly because its features were very similar to the far more popular Competitive
However, to avoid any misunderstandings, similar to those noted above happening again, we thought that we should explain the differences between two such similar sounding procedures.
The Competitive Procedure with Negotiation or Competitive Dialogue Conundrum
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Complex projects
CPN has been specifically designed for use on complex projects. Size and value are practically irrelevant in this decision, so a simple contract for the purchase of administrative materials for the NHS worth many millions of pounds, for instance, would not generally suit CPN. However, the outsourcing of services or the development of bespoke software may well be complex enough for it to be worthy of consideration.
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Clear objectives
Because CPN, by its very nature, is more restrictive than Competitive Dialogue, this requires a client to be more focused on their project objectives and requirements from the very start if they wish to use this procedure. CPN requires you to issue an ITT in enough detail so the bidder can submit a robust proposal. A CD procedure on the other hand allows you to work up your requirements during dialogue and to carry on until you have identified one or more solutions capable of meeting your needs.
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Negotiation stage
These can include literally any aspect of the agreement, from the quality of the solution to contractual clauses, costs, innovation incentives, or ways in which solutions will be implemented. The aim of this stage is to improve a client’s understanding of the supplier’s ability to deliver on their promises to achieve the objectives that have been set for a project, or for determining the best solution for your needs.
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No negotiation
There may well be times when you have done such a good job determining your business objectives and developing your Invitation to Tender (ITT) that the responses you get back make it clear to you which supplier you should proceed with. CPN gives you the option to evaluate and award if you do not believe negotiations would be useful. With CD, you will need to have at least one round of dialogue sessions before asking for final proposals.
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Speed and structure
By having a more detailed ITT with clear business objectives and service requirements you give bidders the chance to submit detailed proposals which should reduce the time needed for negotiation (or remove the need for negotiation altogether). You could see it as a truncated Competitive Dialogue procedure.
CPN step by step
As the diagram above shows, CPN has a simple step-by-step process.
- Develop clear objectives and outcomes.
- Issue a Request to Participate.
- Shortlist at least three of these to receive an Invitation to Tender (ITT) containing the minimum requirements and award criteria – these are areas of the specification not open to negotiation at the core of your project.
- Based on the bids and tenders received you may choose to award the contract to one of these suppliers or enter into negotiations.
- During the negotiation stage, it is advisable to take and retain detailed notes of this stage in case your final selection is challenged.
- Adapt specifications and resend the ITT to all suppliers, providing them with all the additional information and guidance gained through the negotiation process to give all a fair chance to bid for the contract.
- Evaluate and award.
The aim of any procedure is to find the most effective way of determining the supplier best placed to achieve your objectives. All procurement procedures have numerous strict rules to follow – failure to do so could inevitably result in disputes that invariably could well be costly in both financial and reputation terms. These are just a few of the reasons why it is so important to choose the right procurement process from the outset.