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According to the Community and national legislation, "negotiated procedure means the procedure whereby the Contracting Authorities consult the economic operators of their choice and negotiate the terms of the contract with one or more of these."1 [ Directives 2004/18/EC and 2004/17/EC of the European Parliament and of the Council, and Laws 12(I)/2006 and 11(I)/2006 of the Republic of Cyprus.]

In the negotiated procedure, "Contracting Authorities shall negotiate with tenderers the tenders submitted by them in order to adapt them to the requirements which they have set out in the contract notice, the tender documents and the additional documents, if any, and to seek out the best tender."

In this procedure, the Contracting Authority should determine in the tender documents the individual negotiation steps and the terms to be the subject of negotiations.

The negotiated procedure is an exceptional procedure and may be applied only to cases limited to those specified by the Law.

From its definition, it follows that the key characteristic of the negotiated procedure is that the Contracting Authorities negotiate the terms of the contract with the tenderers.

This means that, when using the negotiated procedure, Contracting Authorities may:

Invite candidates with the purpose of awarding a public works contract, a public supply contract or a public service contract, while at the same time they may also
Discuss and negotiate with the candidates who have responded to the invitation, the terms of the contract as specified in the relevant invitation.

Types, characteristics and options of the negotiated procedure

There are two types of negotiated procedure:

The negotiated procedure with publication of a contract notice in the Official Journal of the European Union (OJEU) and in the Official Gazette of the Republic of Cyprus (OGRC) or, if the estimated value of the contract is below the thresholds of article 19 of Law 12(Ι)/2006, only in the OGRC.
The negotiated procedure without publication of a contract notice.

The negotiated procedure (the same applies to the competitive dialogue) may lead either to the appointment of an "Interim Contractor", with whom final negotiations will take place and the contractual documents will be finalised, or, in cases where all contract-related issues have been clarified during the preceding procedure, directly to the appointment of the Final Contractor for the project. The above option or choice made must be determined in advance and must be stated in the tender documents.

In case of failure of the negotiations with the Interim Contractor, the Contracting Authority may proceed to negotiations with the second candidate on the list, and so on. The Contracting Authority is obliged to state these provisions in the tender documents.

The procedure for appointment of an "Interim Contractor" is not possible in the open and restricted procedures, where the tendering procedure leads directly to the appointment of the "final Contractor for the project" without any possibility of consultations or negotiations.

During the negotiated procedure (the same applies to the competitive dialogue), the Contracting Authority has the option to proceed to consultations as well as to negotiations with the candidates regarding the tender documents and their tenders. It is stressed that this option is not allowed in the case of the open procedure nor in that of the restricted procedure.

The limits of the Contracting Authoritys flexibility during the negotiated procedure

During the negotiated procedure, the Contracting Authority may act with a certain degree of flexibility not only in terms of the award of the contract but also during the procedure followed in connection with a relevant invitation or with a relevant a tender procedure.

When using the negotiated procedure for public procurement, however, this flexibility is limited to specific cases and is subject to specific rules.

During the negotiated procedure, the Contracting Authority must adhere to the provisions of the applicable legislation and act as a public authority by applying these provisions, together with the principles governing public procurement (e.g. transparency, equality of treatment) and the principles of proper and ethical governance (e.g. codes of ethics), especially when:

Specifying the contractual terms of the tender documents (technical specifications, prices, schedules, material or non-material terms of the contract etc.).
Evaluating the tenders and their comparative advantages, and negotiating these tenders (Directives 2004/18/EC and 2004/17; Law 12(Ι)/2006, Chapter IV, Article 32, par. 2, p. 41; Law 11(Ι)/2006, Chapter V, Article 38, paragraphs 2 & 3, p. 286).

During the negotiated procedure, the Contracting Authority must apply the principles of equality of treatment and of transparency in its negotiations with economic operators.

Restrictions in the use of the negotiated procedure

Although pursuant to the national and Community legislation Contracting Authorities are free to choose the open or restricted procedure whenever they see fit, they should opt for the negotiated procedure only in the cases listed exhaustively in the relevant Community Directives and in the transposition law. These cases must be interpreted strictly, and the burden of proving their existence lies on the Contracting Authority invoking them.

For these reasons, Contracting Authorities may use the negotiated procedure only in the specific cases listed exhaustively in the Directives and in the national legislation. The following paragraphs provide a detailed description of these cases.

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