The length of the procurement process is an additional source of inefficiency. Lonsdale (2005) has argued that the private sector is in an advantageous bargaining position during the preferred bidder stage. The NAO has noted (2007a) that, once chosen as a preferred bidder, private consortia know that they are "virtually guaranteed" the contract (p 21). A succession of NAO investigations (eg NAO 1999; 2002; 2007a) provides strong evidence that bidders have been able to exploit this by passing risk back to the public sector while increasing prices during this stage. Because bidding consortia need to secure loans from banks prior to contracts being signed, bidders are not required to create fully worked-up bids during the competitive phase of procurement. Instead, there is a period of exclusive negotiation following selection of a preferred bidder- a period that is typically very extensive and can run to many years.
In a sample of 20 hospital procurements, the NAO (2007a) found that the average procurement time was 38 months, almost half of which time was taken up by the preferred bidder stage. It was common for major changes to be made to projects during this period, including increases to prices.