Parallel negotiations involve undertaking negotiations with two or more tenderers at the same time. Generally such an approach should only be used in significant matters and after obtaining specialist advice. If commenced or conducted inappropriately, parallel negotiations can have serious consequences such as: legal action by the tenderer(s); the need to re-tender; and damage to the acquiring entity's reputation.

In view of the risks involved and the time and resources that may be required by the tenderers and the acquiring entity, parallel negotiations should generally only be considered as an option in cases of highly competitive tender responses where it is not possible to determine which tenderer will provide the best value for money, without undertaking parallel negotiations. All participants should have a good chance of becoming the preferred contractor and parallel negotiations should not be used as a means to obtain better conditions from one of the tenderers.

The possibility of parallel negotiations should have been included in the documentation used to approach the market. If such notification had not been given at that time, it would be prudent to obtain specialist advice prior to taking this course of action.

As is the case for other negotiations, parallel negotiations require confidentiality and ethical standards to be maintained. Each tenderer should be treated fairly, and if additional information is provided by the acquiring entity it should be provided to all tenderers.

All participants should have a good chance of becoming the preferred contractor and parallel negotiations should not be used as a means to obtain better conditions from one of the tenderers.