Public Contracts Regulations 2015 - Regulation 29

Regulation 29 - Competitive procedure with negotiation

How many ways can we skin the negotiation cat? Well, according to Directive 2014/24/EU in three different ways: with competitive dialogue, negotiated procedure and competitive procedure with negotiation. The last one is a new introduction of Directive 2014/24/EU and the first one we will cover in our "procurement tennis match" with Albert. Albert's fantastic entry for today is here by the way.

Regulation 29 introduces for England, Wales and Northern Ireland the competitive procedure with negotiation, transposing Article 29 of Directive 2014/24/EU. It does so in an interesting way by starting with the timescales and copying and pasting the exceptions of Article 28(3) of the Directive where Article 29 only included a cross-reference. Dear lawmakers, I am sure any practitioner can follow a cross-reference to the previous Regulation. I am not sure this helps the readability of the Regulation as it throws into the second half (paragraphs 11-20) the actual substantive content.

Ok, tell us about the substantive bits then

As discussed about Regulation 26, competitive procedure with negotiation shares the same grounds for use with competitive dialogue. Neither is a standard procedure that can be used in every scenario, as they depend on compliance with those grounds for use. However, the grounds for use are quite generous (or allow for generous interpretations) so there will be plenty of scope for using both procedures.

The similarities between competitive procedure and competitive dialogue do not end in the grounds for use. The procedure structure is also quite similar, begging the question of  why bothering having two slightly different procedures for the same situations? Having said that, Albert argued correctly that the competitive procedure looks as well as a variation of the restricted procedure. In any case, it is possible to point out some key characteristics of this new procedure:

i) the contracting authority needs to provide sufficiently precise information at the start so that economic operators can make an informed decision to participate (more information than competitive dialogue, less than restricted procedure);

ii) participants submit bids from the start and are bound by them (like restricted procedure, different from competitive dialogue);

iii) negotiations are supposed to improve existing bids (like the original idea of competitive dialogue);

iii) there is no scope for fine-tuning tenders after final tenders are received (like restricted procedure, different from competitive dialogue);

I have written extensively with Luke Butler about competitive procedure with negotiation for our chapter in the Modernising Public Procurement: The new EU Directive book (p.131 - 184) and you can find an ungated version of our paper at SSRN.

How people will use the competitive procedure negotiation in practice?

Honestly, I have no idea. I think they will use it instead of the competitive dialogue as it includes the magic word - "negotiations". For me the litmus test is the level of information available to the contracting authority at the beginning of the procedure: the more it has, the more it makes sense to use the competitive procedure with negotiation instead of the competitive dialogue.

In terms of procedure organisation, there is not a lot to say at this moment. I would start by looking at the best practices with competitive dialogue organisation and build from there. My best practices do not necessarily mean "leading UK practice" or "UK guidance" - both of which I brand as weak and will address tomorrow in detail.

What will be the impact of increased negotiations in public procurement?

Reputed academics have purred and waxed lyrical that we needed more flexibility and negotiations in public procurement. I am not in that camp. My take (and probably Albert's too) is that we will indeed have more negotiations in public procurement.This will lead to increased transaction and opportunity costs, thus making life harder for SMEs in those procedures - you have been warned. Just ask any SME representative association/trade body what they think about competitive dialogue and then extend those concerns to this brave negotiation-heavy world. Furthermore, think about which lobbies pushed for more negotiations: larger contracting authorities and large companies. Big companies do not lobby for something they think will leave them worse off...

More negotiations mean as well plenty of scope for unequal treatment. I stand by my long held view that the most useful way to use competitive dialogue is to design common technical specifications, which by definition mean ignoring confidentiality and equal treatment to a good extent.

But my biggest issue with having more negotiations in public procurement is the assumption that everything will be fine. It won't. The organisations at the top of the procurement food chain (the 1%) will be fine and can make decent if not good use of them (and these are the organisations banging the negotiation drum). The 99% will be playing poker with professional players without having the right training, competencies or resources to do so. After all, when was the last time that "negotiation skills" were a key part of any procurement skill set or training programme?

Pushing for negotiations represents a complete misunderstanding of why procurement rules exist and their objective: they exist to avoid really bad procurement, not to enable great procurement practice. That is why they, like road rules, target the minimum common denominator and not the overachievers. They are a safety net, not a trampoline.