2.4.5 When is there a need to Source Suppliers?

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When there is a need to create a market it is likely that contracting authorities will also experience the need to determine suitable potential suppliers from whom tenders may be sought. This “sourcing process” is particularly relevant if:

the product or service has not previously been procured;
demand for goods or services not previously purchased arises;
there are too few known suppliers;
the existing supplier is performing badly;
the market is rapidly changing;
there is a requirement to improve competition between  suppliers invited to tender  for a contract;
a benchmarking exercise suggests that VFM is not being delivered, i.e. it is important to assess the value of a bid against recent bids for similar projects across all of the contracting authorities.

When sourcing potential suppliers, it is good practice to consider small and medium sized firms as well as larger, well-known companies.

PINs (Prior Information Notices) can help to alert potential suppliers to the opportunity and open a dialogue with them. Potential suppliers may also be requested to complete an expression of interest at this stage. Although this is not obligatory and not stated in the Law, contracting authorities may wish to request an Expression of Interest within the PINS in order to assess the level of interest/ potential number of suppliers that may be interested in bidding for the contract. PINs include details of the contracting authority, contact details and a brief overview of the requirement including background, type of service, timescales and so on. While they should be broad enough to allow for flexibility later, they should also be precise enough to avoid sending mixed, contradictory or misleading messages to the market. Insertion of a PIN does not commit contracting authorities to purchasing or proceeding with a project if circumstances change.

Written records must be retained on the appropriate file which show which suppliers were invited to quote/tender, why suppliers were approached and when requests for quotes/tenders were made.  If in doubt about the inclusion/exclusion of a supplier at the sourcing stage, consult with your Senior Procurement Officer/Procurement Manager (if he/she exists). It is important to note that this is permitted only in certain procurement procedures which are provided in the Law (e.g. Negotiation procedure without advertising)

Such dialogue is an act of balancing because it carries the risk of contravening the principle of equal treatment. It must be clear to project designers that early market engagement leading to the subsequent tailoring of project requirements to a certain suppliers product is forbidden.  Project requirements and specifications must be kept neutral so as to allow open competition.

As a Member State to the WTO Agreement on Government Procurement, Cypriot contracting authorities can benefit from the access to markets in countries that have ratified this Agreement.

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