Route 3 - Post Tender Clarification - Post Tender Negotiation

Post Tender Negotiation (PTN) should not be confused with 'tender' or 'bid clarification'. Tender clarification, explained in the previous section, is contact between the Procurement Officer and the tenderer(s) purely for the purpose of clarifying aspects of the tender which are perhaps ambiguous or anomalous.

PTN as part of the competitive tendering process in the open and restricted procedures may be used to refine and improve the bid(s) from the preferred supplier(s) in order to ensure that prices, delivery or associated terms of the contract are competitive.

The potential areas for negotiation will differ for every contract but typical topics might be: the terms of payment; quality of goods or services; supply and cost of spare parts; earlier delivery or completion dates; warranties and guarantees; documentation requirements; expediting and inspection procedures; maintenance and support; repair or after-sales service; compensation for failure to meet specified requirements (e.g. of delivery, quality etc.) Sustainable Procurement; possible Community Benefits and procedures for remedial action for unsatisfactory service. The list is not meant to be exhaustive.

PTN must not become any form of 'Dutch Auction': unfairly trading off one tenderer against another by using the lowest tender to seek a reduction in costs from the other tenderers.

Competition must not be distorted by allowing a tenderer, not clearly in the lead, a chance to improve its offer. Nor should any changes be made which would result in a contract being awarded on terms more favourable to the tenderer. Particular care should be taken if any suggestion were made to reduce prices but also to adjust the specification in a manner more favourable to the tenderer. There is a risk that such an adjustment could have led to a different outcome in the competition even if the price was reduced commensurately.

It must be a controlled and documented process. It should not be used automatically on all procurements. Before engaging in PTN, the following criteria must be met:

  • there must be a considered and soundly based prospect of improving value for money

  • it must be subject to senior management's prior approval

  • trained and experienced purchasing staff must conduct negotiations

  • the negotiations must be fully documented, so that a clear audit trail is left

A clear "audit trail" must be available so that it can be seen that it was conducted in a fair manner. The file should show:

  • the justification for PTN

  • the approval for PTN (at a suitably senior level of management)

  • the aim of the negotiation

  • the precise record of all exchanges written and verbal

  • the approval for the award of contract

When carried out in an atmosphere of openness and mutual trust negotiations can strengthen relationships with suppliers.

Any documents you need are listed below:

Negotiation Process (file type: docx)

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