2.3.1 Before a procurer can move to the stage of appointing a preferred bidder, it will need to have established the sequence of events between the Invitation to Negotiate (ITN) and the appointment. There are a number of issues which must be considered and agreed early in the competitive process, ie before the issue of the ITN, particularly those issues that will require clarification and negotiation with bidders during the ITN response period.
2.3.2 Confidence about deliverability should be considered. Procurers should decide whether any bid should be rejected, irrespective of how it is rated for price, where there are clear grounds for lacking confidence that, for example, the specified quality of service will be achieved, that the service will be available by the required date, that the funding proposals are sufficiently robust, or that key assumptions (such as demand/traffic forecasts) on which the bid is based are realistic.
2.3.3 Once the deliverability issue has been resolved and a minimum quality threshold has been established and notified to bidders, it will be useful to consider how conflicts between cost and quality will be resolved. For example, to what extent the procurer should pay a premium for what is perceived to be a higher quality service (eg triple glazing where this does not contribute towards a lower NPV). This is an issue which requires a cost benefit analysis, taking advice from financial advisers as necessary.
2.3.4 When more than one contract is to be awarded from a single competition, there needs to be a basis for deciding whether more than one contract might be awarded to a single supplier. In order to reach such decisions, the procurer needs to ensure that there is a clear invitation in the ITN for bidders to indicate any discount they are willing to offer if awarded more than one contract, and to provide the evidence required to enable the procurer to be satisfied that adequate arrangements would be in place to manage the greater risks assumed by a supplier in such circumstances. In some cases, procurers may identify unacceptable risks in letting more than one contract to one bidder, as was the case for example in the letting of the first two major PFI prison contracts.
2.3.5 At the beginning of the PFI procurement process, it is important to consider any market share or strategic market development issues (ie whether or not it is important to look at potential effects on similar future projects). The criteria to be followed in these circumstances must have been explained at a very early stage to bidders to ensure that they have had the opportunity to comment before final decisions are taken (at least prior to the ITN and possibly at OJEC stage). Procurers must take legal advice before developing and applying such criteria.
2.3.6 A detailed methodology for making selection decisions must be finalised by the procurer before responses to ITNs are received. This should only be revised if a further request for Best and Final Offers (BAFOs) is called for, in which case, any revised scoring system must be finalised before these are submitted. Bidders should be clear on how their bids will be evaluated.
2.3.7 Similarly, ITNs should indicate how variant bids will be dealt with. Variant bids can be considered if a compliant bid is submitted. It is important to ensure that bidders understand that there is an acceptable way of proposing alternative solutions but that non-compliant bids will result in their exclusion from competition. The criteria for evaluating variant bids must have also been determined internally before bids are submitted, although there may have to be some fine-tuning in the light of what is actually received. This is an issue on which procurers need to work closely with advisers, including departmental legal advisers. These matters need to be explained to bidders in ITNs and may be clarified in discussion during the ITN response period.