2.4.3 When is Market Sounding Undertaken?

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Prior (and well in advance) of any procurement exercise, contracting authorities may wish to assess the reaction of the marketplace to a particular requirement or procurement process. Particular areas of interest might be:

the more accurately estimate the required budget for a particular contract
to refine and further clarify the requirement and/or produce the specification
to identify potential suppliers
To develop general market knowledge.

There is no specific process for market sounding and it does not follow any specific EU or national rules or procedures. It is however, appropriate for contracting authorities personnel to make contact with suppliers through attending trade fairs, exhibitions and demonstrations. Other ways of communicating include PINs, running workshops and conferences and via the internet. The outcome of the market sounding process is for contracting authorities to have a better understanding of the likelihood of generating a competitive response to a requirement.

A key element is to gather and consider market intelligence within key sector groups and bring the suppliers perspective to the public sector procurement process. The benefits of market sounding include:

Saving time and effort by bringing a precise focus to later procurement activities;
early visibility of issues that will affect the project;
Early understanding of project risks;
Develop more competitive procurement strategies;
Ensure and enable capacity to meet future programmes and projects.

There are four key areas where market sounding may assist:

Assessing the feasibility of a proposed project;
Assessing the capability of the market place to deliver;
Assessing whether there is an established market to deliver the project and an adequate number of suppliers;
Assessing the capacity of the market to deliver.

The following checklist provides a series of questions that a contracting authority may wish to answer when undertaking a market sounding process.

 

Checklist 2-4: Considerations when undertaking a market sounding process

Consideration

Y/N

Is the project you are considering actually feasible? (technically, financially, operationally and within the required timeframes)

 

Has the project ever been undertaken before?

 

Can the project be delivered by a single supplier?

 

Does the project require a consortium of suppliers due to its complexity or innovation?

 

Is there an established market for the requirement?

 

Are there enough suppliers in existence for a competitive procurement?

 

Can the market deliver what you require within the timeframe?

 

Can the market deliver what you require on a large enough scale?

 

 

Market sounding may only be undertaken before the commencement of the procurement process. It is important that personnel do not compromise any subsequent procurement exercise in any way e.g. by giving any one supplier additional information on any forthcoming contracts and therefore an unfair advantage in the bidding process.

When appropriate, contracting authorities should ensure that there is appropriate consultation with members of the public who will be directly affected by the outcome of procurement and also with the wider community and other stakeholders.

Market sounding involves no element of supplier selection or bid evaluation and involves no commitment from either side. Market sounding is not appropriate for every project. It is probably more beneficial for new/innovative projects particularly within ever developing sectors such as ICT, or projects involving high technical requirements such as large infrastructural projects.

Engaging the market provides an opportunity to ensure that services provided are at the forefront of those available.


© 2007 Republic of Cyprus, Treasury of the Republic, Public Procurement Directorate
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