6.2  Set the negotiation framework

The negotiating team and the preferred bidder need to work together to set terms for negotiations, as a framework for contract negotiations. The terms usually feature the following:

•  definition of negotiating issues. The issues to be negotiated should be clearly set out, together with government's position on each of them. Without this structure, the negotiations could move into areas which are otherwise settled. The issues that the preferred bidder seeks to negotiate should be confined to departures from the contract provided with the RFP, as reflected in the proposal;

•  control of drafting. The drafting process should be managed by the legal advisors to the procurement team, including management of version control and assessing which parties need to review changes. The Project Director must ensure that amended documents are only circulated to parties with a direct interest, to avoid unnecessary discussions and delays. For example, there may be matters of interest to the preferred bidder's builder or its legal advisors which do not need detailed discussions or comments from the operator;

•  recording of agreed matters. All matters agreed upon during the negotiations should be recorded in meeting notes and agreed at the end of each meeting. This reduces the risk of issues being revisited and provides clear instructions for contract drafting purposes;

•  do not revisit agreed issues or introduce new ones. The Project Director should not admit any new issues into negotiations (i.e. issues not raised previously in bids) and the parties should agree not to re‑open issues already agreed;

•  agree timetable for the negotiation. This is important to prevent delaying tactics and ensure the overall timetable for project implementation is upheld;

•  agree dispute resolution process. An agreed process for overcoming any impasse in negotiations typically involves seeking resolution from senior management. The parties need to ensure that the appropriate senior managers are accessible throughout the negotiations; and

•  authority to commit. Both negotiation teams need to appoint members with the authority to make decisions on behalf of their organisations (although in certain instances approval of government may be required before the Project Director can to agree on these issues).

If the preferred bidder's circumstances change and require the project to proceed on a materially different basis from the initial bid, the procurement team must undertake a full re‑evaluation. This re‑evaluation should then reconsider other bidders' proposals. Should the re‑evaluation indicate a worse position for government than the reserve bid, then government should be advised and a determination made whether to proceed with the preferred bidder or another bidder. The Probity Practitioner should be involved in discussions where the Preferred Bidder's circumstance materially changes.