2.2.1 After the appointment of a preferred bidder, it may be difficult to maintain competitive tension. Since competition is the best driver of value for money, great care needs to be taken that the appointment is not made prematurely. However, prolonging competition beyond a point that is optimal increases costs for both bidders and procurers alike and increases the risk of the withdrawal of bids. Key contractual terms should normally be agreed before the appointment of a preferred bidder. For this to be effective, the bidder's financiers will need to have reviewed and accepted the contract terms. Financiers should also be required to supply confirmation that they have committed to the project (to the extent agreed in advance at the shortlisting stage), and have tested the robustness of the financing proposals for the purpose of the required finance (see paragraph 4.3.4).
2.2.2 Preferred bidder stage is the final stage before financial close and contract signature. Having already assessed the deliverability, affordability and value for money of the preferred bid, the time during this stage should be used to finalise detailed drafting of the project terms, and the schedules to the contract that specify the operation of the service and define the nature of the asset as proposed in the bid. The time should be used for putting the financial documentation into place rather than for substantive negotiations over commercial terms or price.
2.2.3 Generally, the ideal time to appoint a preferred bidder is when there is little risk that the finalisation of contract terms details, due diligence and funding arrangements (and, when required, TUPE negotiations and other negotiations with employees and/or detailed planning clearance or other statutory consents) will lead to any material change to the proposed deal.
2.2.4 Anything further, such as an adjustment of the risk transfer originally agreed, a reassessment of the price at which the bids were placed, or the reopening of key contract terms, would normally be indicative of a preferred bidder being selected prematurely and may involve a breach of EC procurement rules.
2.2.5 During the procurement process, procurers should be committed to fairness in their treatment of bidders, delivering agreed plans and timetables, and devote well-organised, well-advised and capable procurement staff to the project. With the right level of resources, a realistic timetable and adequate preparation before each stage of the competition it should be possible to avoid:
• unilateral extensions to agreed timetables;
• excessive clarification;
• unplanned resubmission of bids or re-pricing of offers; and
• arbitrary changes to the selection process.
2.2.6 Procurers should avoid setting unrealistic timetables as this creates a risk that bidders may drop out of the competition or submit non-compliant bids. However, procurers should also reserve the right, subject to any legal constraints, in the light of changing circumstances to modify the timetable, to seek re-submission of bids and to change the selection process in any way which seems likely to improve value for money, although this should be unnecessary where the timetable is realistic and the project team is adequately resourced.