Is public procurement ready to bring negotiation back to the table?

WORDS by Joseph Gross and Jamie Gardner 

We recently published the first part of this Procurement Bill 2023 series to introduce the UK’s forthcoming changes, designed to make procurement quicker, simpler, more innovative, sustainable and more transparent. You can access it here or from the bottom of this article.

A simplified competitive tender process 

The current regulations provide contracting authorities with a choice of up to five different competitive procurement procedures, in addition to standard sourcing options, such as frameworks and dynamic purchasing systems. Part 3 of the Procurement Bill, however, maintains just one of these competitive procedures and introduces a new procedure for running a competitive tender process, reducing the procurement pathway down to two routes:

• The existing “open procedure”: a single stage tendering procedure without any restriction on who may participate

or

• A new “competitive flexible procedure”: a competitive tendering procedure that the contracting authority considers appropriate for the purpose of awarding the public contract (a bespoke approach)

This change will allow contracting authorities greater freedom to tailor a procurement exercise to the specific needs of their requirements and the market offering. 

Most notable about the proposed competitive flexible procedure is that it appears to permit many different permutations: procedures with or without a selection stage, multiple down selections, and no apparent restrictions on pre- or post-tender negotiation, provided general principles such as transparency and equal treatment are complied with. Detailed guidance is still forthcoming, and we hope it will provide context and structure, while still retaining the flexibility that these reforms look to achieve.

Fewer restrictions on post-tender negotiations

We believe this new procedure, and the subsequent greater opportunity for use of negotiation in public sector procurement, will be one of the greatest changes resulting from the new bill. Many public sector organisations were previously bound by the Public Contracts Regulations 2015 and the Defence and Security Public Contracts Regulations 2011, whereby the predominant use of competitive open and restricted procedures did not allow for multi-stage negotiation and clarification of tender responses. Competitive dialogue and competitive procedure with negotiation (CPN) was permitted for particularly complex procurements. However, with these procedures, there were still significant constraints on post-tender negotiations.

The new competitive flexible procedure aims to largely remove the previous restrictions on post-tender negotiations, giving procurement teams greater flexibility. Procedures are going to be less formulaic and prescriptive, leaving the choice open to the procurement authority on what the competitive procedure should look like. This will provide greater freedom for commercial professionals to run competitions, encouraging innovation and negotiation to maximise value achieved.

What should you do next?

The Bill is still undergoing review and is not yet legislation. We believe that now is the time to think about the skills and capabilities of your team, and how prepared they will be for procuring works, goods, and services under a more flexible system.

We encourage commercial functions to review their teams’ recent experience, especially in departments that have predominantly operated under Public Contracts Regulations (PCR) in recent years, so may not have actively engaged in negotiated procedures. Teams in the Utilities sector, where negotiated procedures are more common, may feel more comfortable with negotiation – but they will be afforded more flexibility than before, so may benefit from training in more bespoke approaches.  

How can we help?

Efficio has extensive experience in both advising and delivering regulatory-compliant procurements under PCR, UCR, and DSPCR. 

With over 150 practitioners experienced in working within Public Procurement Regulations across Central Government, Defence, Health, and Utilities, we look to bring best practice from all industries and sectors together to maximise the value we can deliver to our clients. This experience is particularly relevant when it comes to evidence-based negotiation.  

We are proud of the results we have achieved over the years in the Utilities sector, in which we have helped our clients make the negotiated procedure their default route to market. Having conducted complex and challenging negotiations both with and on behalf of our clients, we are in an ideal position to help your teams transition to this new, commercially-focussed environment. 

Your commercial functions can also benefit by attending the upcoming Efficio Academy “Negotiation in the Public Sector” forum on Wednesday, 19 April. This event will include discussion of the changes we see on the horizon, as well as a “Negotiation Round Table”, including role-plays.     

We hope you will join the Efficio team for this upcoming session at our London headquarters.

Please register your interest here.