“Market Warming” – without getting your fingers burnt!

There is a good article in the new edition of Supply Management around pre-procurement engagement with suppliers.  I’d been planning to write on the topic but Tim Heywood of Burgess Salmon has beaten me to it. The question we’re all considering is this.

 “How can I explore the market before I start a formal procurement process, without creating bias and unfairness in the process?”

And while this is often seen as a public sector issue, with the potential for legal challenge, we might suggest it applies just as much in the private. Many bad, inappropriate contracts get put in place in private sector firms because of a cosy pre-procurement “fireside chat” between a particular supplier and the CEO, CFO, or CPO.

Yet of course there are major benefits to exploring the market and gaining a good understanding before going into a formal competition. In thepublic sector context, Cabinet Office Minister Francis Maude has rightly emphasised that you CAN talk to suppliers before you start a procurement.

But in the new EU draft procurement directives, there is a bit of a warning shot -   “...preliminary contacts with market participants must not result in unfair advantages and distortions of competitions. The proposal contains therefore a specific provision on safeguards against undue preference in favour of participants who have advised the contracting authority or been involved in the preparation of the procedure".

So we do have to take care.  We will see some successful challenges to contracts, I predict, based on “pre-contract engagement” turning out to be a large firm telling the naive buyer / CIO / council leader exactly how to frame the specification to make sure that firm wins the contract!

And while Heywood’s article is very useful, I do have one point where although I hesitate to argue with a lawyer, I think the advice might still leave buyers vulnerable to legal challenge. Here he is on meetings with suppliers.

You know there’s a risk of actually giving one provider an unfair advantage. So plan to avoid it. Set up the venue, the agenda and timings of the meetings so that everyone can see they are getting the same treatment. Set out the authority’s requirements and share them with all the attending suppliers. Invite questions, comment and feedback”.

I would add one point to his good advice though. While he suggest supplier days and meetings, which are fine, we believe it is important that you go beyond the “usual suspects”. If you only talk to IBM, you’ll get an IBM solution. If you want advice on innovative marketing strategies and you talk to a digital marketing agency, they’ll tell you TV and Press are dead. So get a range of views from a range of potential providers.

Then I can see potential for firms challenging on the grounds that their competitors got invited to a supplier day, or had a private meeting, and they didn’t. So when working as a consultant, my advice topublic sector clients has always been (note to Mr Maude – I have promoted this for years) to publicise that you want to engage, and invite any organisation to put ideas forward.

Put something on your website or even in the trade press to get the message across. Giving everyone and anyone the opportunity to participate  – in some way at least – in your pre-procurement process. That means it will be much harder later for them to claim that they were treated unfairly.

But merely choosing a few of your favourites for cosy chats, no matter how well documented those chats may be, could leave you vulnerable later.

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