Finally… negotiation and UK submission on review of EU procurement regulations

It’s slightly embarrassing but I’ve realised that we left readers hanging after our series some weeks ago on the UK’s proposed changes to the EU public procurement regulations. On one particular suggestion, we said this:

• Allow procurers much more freedom to negotiate   - This seems a great idea but – this way madness lies!  There are good reasons why the public sector is restricted in its ability to negotiate – go and ask a few African countries about the downsides of allowing “negotiation”.  I need to stretch out a bit on this one so we’ll discuss it further in a further post.

So finally, here is that “further post”!

Any of us who have worked in the public sector for some time will have examples of competitions where the expected suppliers – or the top people’s favourite or expected winner – didn’t come through and win. And that was because we used an objective process.  So when Francis Maude says, in his note to  encourage us to support the UK’s suggested changes to EU procurement regulations, that one of our recommendations is  Allow procurers much more freedom to negotiate  we might have some concern.

As soon as you allow procurers more freedom to negotiate – how do you stop pressure being put on them to come up with the “right” answer? What about if Ministers want to get involved in the negotiation? (Not mentioning any names...) How do you keep bids confidential?

This is a can of worms.  I’m sure someone has had that conversation with Francis Maude – I suspect he is so focused on savings (for which he deserves much credit) that he purely sees the benefits you might realise by a bit of judicious supplier-thrashing aka negotiation.

More “freedom” could also open up a huge expansion in the lobbying industry, as we discussed in our comments on the James Forsyth article yesterday. There would be more legal challenges, firms looking for evidence of Ministerial contacts with suppliers as evidence that something dodgy has gone on – a nightmare and perhaps even the slow death of public sector procurement as we know it.

But then, we read the actual UK detailed submission to the Commission, which is far more balanced than the headline might suggest.  It is not actually about “more freedom” for procurement people.  It actually says this:

Use of the competitive negotiated procedure (questions 19 -21)

 We would be in favour of generalising the use of the negotiated procedure with publication....We would suggest that the Directive makes clear that ongoing communication with suppliers is permitted or even encouraged, (and that guidance from the Commission should provide examples of how discussions during the procurement process can be accommodated within the scope of the equal treatment principle.) This would deliver better outcomes for both the supplier and the contracting authority.

And this I think is fine – the “negotiated procedure” with proper process is fine.  Indeed, I would support more use of “negotiation” and certainly more communication during contracting, but it should be done within a carefully defined framework, and we have to make sure that, for example, all bidders have the same opportunity to come up with improved terms if we are going to allow more post tender negotiation.

So while I would have concerns about moving to a generalised free for all in terms of negotiation, as suggested perhaps by the Cabinet Office headline summary, the actual submission seems to be a well considered and intelligent set of proposals.

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