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Back to the Future for Public Sector IT Procurement

See the link below for a joint article in Supply Management written with a good friend and colleague of mine – Andy Lucas.

Back to the Future

The cabinet office’s recent information note of 25 July 2013 gave an update on the proposed changes to EU procurement rules. According to the note, the alterations will mean “being able to run procurement exercises faster… less red tape… more focus on getting the right supplier and the best tender.” In order to realise these benefits as soon as possible, the government is proposing to accelerate implementation to mid-2014.

Due to the uncertainty of the impact of the changes, project leaders have a choice: go now, or wait and be a pathfinder for the new procedures. But there is another alternative, which has been there all along: welcome back to the negotiated procedure. Before looking at what this means, it’s worth taking a glance at why the procedure fell out of favour in the first place.

The Public Contracts Regulations (2006) introduced the competitive dialogue procedure. The associated guidance made clear this should be used in preference to the negotiated procedure, which had acquired a reputation for creating protracted preferred bidder stages and a loss of competitive tension.

Competitive dialogue provided for parallel dialogue with two or three bidders before finalisation of the contract documentation, but no negotiation after the tenders were evaluated. The negotiated procedure did not require or set out a process for dialogue, but provided for post-tender negotiations on the final contract.

For many practitioners, this was a distinction without a difference, saying more about the competence of the acquisition team than the procedure itself. Well-managed procurement processes always sought to keep more than one bidder for as long as possible, regardless of the procedure being used.

Predictably, the effect of competitive dialogue was to reduce the time spent in post-tender evaluation, but substantially increase the time and effort spent in dialogue. As a reaction to this, the Cabinet Office’s Procurement Policy Action Note 9 May 2012 (04/12) instigated a presumption against the use of competitive dialogue, save for the most complex procurements.

This forced buyers to use the open or restricted procedures, meaning they had to complete their requirements gathering and validation before they issued the PQQ/ITT. The get out that “we’ll cover that in dialogue” was no longer available to flesh out missing requirements, or to amend requirements that were poorly written or undeliverable. This left the procurement team in an invidious position. How could they work with the suppliers to get the best solution and value for money without stretching the rules past breaking point?

With the new draft rules, the wheel has turned full circle and we are back where we started. Enter the new (or should that be old) ‘competitive procedure with negotiation’, with regulations relaxing the “constraints on using the negotiated procedure… so that procedure is available for any requirements that go beyond ‘off the shelf’ purchasing.”

Based on this, shouldn’t public sector leaders planning complex procurements take advantage of the current negotiated procedure now? Should they really have to wait for the new rules?