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Public procurement: talk and negotiate for better outcomes and value for money

Monday November 30th, 2015

Six years ago I reviewed “Competitive Dialogue – A practical guide” written by Mike Burnett with Martin Oder.

In that review I said that competitive dialogue, when applied in a timely and effective fashion, provides the basis for creating long-term partnerships between provider and public sector client. I also said that when it is applied badly it can lead to antagonistic relations. I could have added that the process can ensure value for money and wider public value when used well. I also wrote that Burnett’s book had added to our understanding of competitive dialogue-based public procurement and, if the book’s practical guidance was followed, there would be significant improvements in public sector procurement and consequent outcomes.

John Tizard

John Tizard

Burnett has partnered again with Martin Oder to produce a second edition entitled “Competitive Dialogue and Negotiated Procedures – a practical guide” (published by the European Institute for Public Administration – EIPA). The new book, which has recently been published, is as essential a read as the first edition for policy makers and those engaged in public procurement, whether they be public sector clients, providers or advisors.

The new edition of the book is as readable and accessible as the first edition. It can be as easily read by politicians and senior executives not directly involved in the procurement process as by technical professionals. Indeed, it should be read by everyone concerned with securing value for money from complex public procurements, finding ways of improving the outcomes and efficacy of public-private partnerships, increasing investment in public infrastructure and understanding the detail of the European public procurement regulations.

Why, the reader might ask, has Burnett written a second edition?

There are several very relevant reasons for having done so. He has drawn on the experience of the use of Competitive Dialogue across the EU. He has addressed the recent reforms of the public procurement Directives which have introduced changes to the both the Competitive Dialogue and Negotiated Procedures with prior publication of a contract notice, which, in the new Public Procurement Directive, has been renamed the Competitive Procedure with Negotiation. He also reflected on the impact of the global financial crisis, the growth in investment in the EU and the UK in particular by international investors and governments, and the current UK government’s twin pursuit of austerity and investment in public infrastructure.

Burnett has also drawn on his experience as the PPP Expert and lead at the European Institute of Public Administration (EIPA) and his experience of public procurement in some twenty-five countries. Oder brings considerable legal expertise to the party.

The main thrust of the book is to argue that Competitive Dialogue and the Negotiated Procedures are vital to effective PPPs and for major public services contracts but require great skill and care by awarding bodies and their teams.

There must be a clear pre-procurement decision and rationale for using these procedures for which there must be transparency and accountability. The legal basis for using it must be clear too.

Public awarding bodies have to be confident that they have the expertise and capacity to undertake the procurement before embarking on it.

The overarching aim must always to secure value for money. This does not mean agreeing the cheapest contract price nor assuming that value for money should exclude wider social, economic and environmental benefits. It most certainly should and, in my view must, always include these objectives.

Prior to the commencement of the procurement process there should always be clarity about the outcomes being sought, the financial envelope, and the strengths and weaknesses of alternative options for securing the desired outcome. There should also be very detailed and considered planning for the process – ill-thought and unprepared procurement will lead to poor outcomes, less sense of partnership between provider and client and wasteful expenditure, including potentially on expensive aborted procurement or projects.

There must also be clarity about what the process will be, what will be expected of bidders and what will be negotiable and on what basis; what will be shared with other bidders, on what basis and when; how the final selection of bidder to award will be determined and by what criteria.

Procurement processes should always be transparent and open to public scrutiny. In my view, this should include consultation on the business case for any procurement in advance of the commencement of the procurement process.

Legislation and regulation should reflect what is required for pragmatic processes and outcomes which are consistent with the pursuit of value for money and probity (perceived and actual).

Getting the right planning and having the right objectives for outcomes and long-term “whole life” value for money including social value are very important in the UK (especially England) as the Government seeks to cut revenue spending, outsource ever more public services and to invest in infrastructure fast in advance of the 2020 general election.

In the final section of the final chapter, which is new to this edition of the book, Burnett sets out an agenda for action for:

  • the EU Commission to clarify the legal framework and to align it with political goals
  • national governments to
    • develop good practice for planning and implementation, including in England, for example, potentially setting up national units based in the Cabinet Office Crown Commercial Service and/or the Local Government Association (the LGA)
    • consider the merits of strategic management of procurement and suppliers to maximise collective value for money
  • developing using a variety of funding models for PPP, which, as the authors point out, could include hybrids using cheaper public borrowed capital and privately sourced finance)
  • aligning EU and national legislation to facilitate the effective implementation of Competitive Dialogue
  • improving the behaviours and performance of public sector awarding bodies

If I have a minor criticism of the book, it would be that it does not sufficiently question the value for money of many existing PPP and PFI schemes. This experience is a fundamental reason why the approach being proposed by Burnett is so important as value for money is critical.

Six years ago I enjoyed reading the first edition of this book and commended it as essential reading for everyone with an interest in major strategic public procurement. In 2015 I feel even more enthusiastic in recommending that the second edition of “Competitive Dialogue and Negotiated Procedures – A practical guide”.

Such reading could lead to better public outcomes. The message should be “read the book and then use Competitive Dialogue and negotiate for the public interest when procuring.”

 

John Tizard

Online: www.johntizard.com
Twitter: @johntizard
Linked In: John Tizard

Gov Opps’ training partner, PASS (Procurement Advice Support Service) runs relevant procurement training events for the public and private sector. To view the brand new schedule of events, click HERE.

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