5.4.2 Two cases of a negotiated procedure

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In this section, two cases of negotiated procedure are presented:

The first case refers to the submission of irregular or unacceptable tenders in response to an open or restricted procedure or a competitive dialogue (this is one of the cases of paragraph 5.2.2). The Contracting Authority intends to repeat the tender procedure using the negotiated procedure with publication of a contract notice, invoking the provisions of the aforementioned paragraph, and
The second case is a case where the Contracting Authority cannot establish beforehand the specifications of a public service contract with sufficient precision (this is also one of the cases of paragraph 5.2.2).

Negotiated procedure with publication of a contract notice following the submission of irregular or unacceptable tenders

This case refers to the submission of irregular or unacceptable tenders in response to an open or restricted procedure or a competitive dialogue.

In tender procedures for the award of public works contracts, public supply contracts and public service contracts, there may be cases of irregular or unacceptable tenders being submitted by economic operators. In such cases, Contracting Authorities may cancel the previous tender procedure and repeat it using the negotiated procedure with publication of a contract notice. This option is only possible insofar as the original terms of the contract are not substantially altered.

The new procedure is usually a two-stage procedure (consisting of the stage of invitation of requests to participate, and of the stage of submission of tenders which also includes the invitation to negotiate).

The Contracting Authority publishes an invitation of requests to participate, inviting interested economic operators to participate in the negotiation. It then proceeds to select the economic operators with whom it shall negotiate their tenders. This selection (prequalification) is based on the selection criteria described in the invitation of requests to participate.

In the invitation to negotiate, the Contracting Authority sets the negotiation framework and specifies the elements of the economic operators’ tenders which may be the subject of negotiations.

The tenders are prepared on the basis of the tender documents for the negotiated procedure, whose terms cannot be substantially different from those of the respective tender documents for the previous tender procedure.

In these cases, the financial offers of the participants in the negotiation are not subject to negotiations, but are usually prepared and submitted separately, in a sealed envelope, during the stage of submission of binding tenders which follows after conclusion of the negotiation.

During the negotiation, the Contracting Authority and the economic operators negotiate the contents of the technical offers in order to adapt them to the specifications and terms of the tender documents and to the terms of the contract, if there are deviations from them.

Once the negotiation is concluded, the Contracting Authority invites the economic operators who participated to submit their binding tenders (technical offers and financial offers), which must be adapted to the requirements of the tender documents as these have been modified as a result of the negotiation procedure.

The Contracting Authority then evaluates these tenders on the basis of the award criteria as predetermined in the tender documents, and appoints the Interim Contractor. The Contracting Authority negotiates with the latter the final terms of the contract, which cannot be substantially different from those provided for in the tender documents, and the procedure is concluded with the signature of the relevant contract.

In the present case, which refers to the first condition under paragraph 5.2.1, the Contracting Authority (as also mentioned in the respective paragraph) may not publish a contract notice if it includes in the negotiations all economic operators who meet the qualitative selection criteria and who, during the previous open or restricted procedure or competitive dialogue, have submitted tenders complying with the formal requirements (submission of tender guarantee, submission of tenders within the specified time limit, completeness of the tender envelope etc.) of the contract award procedure.

Negotiated procedure with publication of a contract notice where prior establishment of the specifications of a public service contract is not possible

This case refers mainly to the services in category 6 Annex ΙΙΑ of Community Directive 2004/18 and of Law 12(Ι)/2006 of the Republic of Cyprus (financial services including insurance services, banking and investment services etc.), but also to other intellectual services generally.

In the case of these services, when the Contracting Authority cannot establish with sufficient precision its specifications and requirements in order to award a service contract using the open or restricted procedure, then it may use the negotiated procedure to select the best tender.

The negotiated procedure in this case may be carried out as follows.

The Contracting Authority publishes an invitation of requests to participate, in which it defines the objectives it wishes to accomplish, its key requirements and needs, the selection criteria and the basic criteria for the award of the contract.

Within this framework, the Contracting Authority has two options:

To provide, in the invitation to participate, for the submission only of the documents regarding the personal situation of the candidates and of the information about their technical and financial capacity. The selection criteria must be appropriate and must be related to the scope of the particular contract.
To provide, in the invitation to participate, for the submission, in addition to the above documents and information, of a “draft solution”, i.e. a preliminary description of the solution which the candidate intends to propose in response to the Contracting Authority's requirements and criteria. The economic operators may also be invited to supply an estimate of the cost for the implementation of their proposed draft solution.

After the requests for participation are received, the Contracting Authority proceeds in both cases to the selection of the economic operators to participate in the negotiation.

The selection (prequalification) is made on the basis of the predetermined selection criteria (technical and financial capacity), and is preceded by the usual verification of the information concerning the personal situation of the candidates. Pursuant to the Community Directives and the national law, the minimum number of candidates to qualify for participation in the negotiation cannot be less than three (3) (provided that the number of candidates is sufficient). In all cases, the number of candidates to be invited must be sufficient to ensure genuine competition.

It is also possible to provide for a subsequent optional stage, in which the Contracting Authority, after the prequalification of candidates on the basis of the selection criteria specified in the invitation, may request prequalified candidates to submit a “draft solution” which can serve as the basis for the negotiation to follow.

In all cases, the Contracting Authority shall then enter into negotiations with the prequalified economic operators, for the purpose of examining the best way in which its needs may be covered.

Once the negotiation is concluded, the Contracting Authority, taking into consideration the proposed solutions and the results of the negotiation with the participants, prepares the tender documents for the invitation to tender.

The Contracting Authority invites the participants to submit their tenders on the basis of the above tender documents.

The tenders are evaluated on the basis of the award criteria, and the contract is awarded, without any possibility of further negotiation, either to the most economically advantageous tender or to the tender with the lowest price.

This procedure is a typical and simple negotiated procedure that follows the stages and individual steps presented in paragraph 5.3.1.

It should be pointed out that the above refer mainly to the negotiated procedure with publication of a contract notice. However, they can also be applied to the negotiated procedure without publication of a contract notice. In the latter case, the Contracting Authorities are more flexible in their negotiations with the economic operators: for example, they may examine the candidate contractor's suitability (personal situation and technical and financial capacity, which are the qualitative selection criteria), before the signature of the relevant contract.


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