9. In appointing a preferred bidder the IPT should be very clear in terms of its expectations for the next stage of the procurement. Best practice dictates that the preferred bidder (either in its letter of appointment as such or shortly thereafter) is given a closed list of issues which remain open for negotiation (based on the evaluation of its bid and any subsequent clarifications) and is required to agree such list prior to any further discussion. If the preferred bidder adds issues to the list the IPT needs to take a view on their materiality and decide whether it still wishes to pursue negotiations with this bidder. If the issues which are added are materially different to what the IPT understood to be the position in the bidder's last competitive submission then query whether the IPT should actually revisit its evaluation of bids. The net effect of this process is that outstanding issues are scoped in detail prior to being negotiated. In effect, the IPT is given a final opportunity to take advantage of competitive tension. The aim in scoping the remaining issues for resolution is, as far possible, to narrow the issues open for discussion and impose some discipline on the process. To facilitate this scoping activity IPTs should issue a fresh version of the documentation capturing all agreed points and identifying those where further discussion is permissible. Lenders will also want to have input on the list of outstanding issues. Ideally the IPT will want to identify a realistic contract award date with the preferred bidder and lenders, but can only do so if it has comprehensively scoped the activity leading to project closure. It may also wish to discuss with its advisers (having regard to the relevant framework agreement) whether there is an appropriate mechanism under which they can be incentivised regarding their input during this stage of the procurement process.
10. It is important that lenders make a good start to their due diligence activity (and in particular their technical due diligence). The IPT must factor into its time-tabling the availability (or not) of the lenders' advisers and in particular, on complex equipment projects, the technical advisers. Availability considerations can have a significant impact on the time-table. If the IPT is required to indicate a level of confidence that such and such a date is achievable, and does so without analysing dependencies on external advisers it runs a very real risk of over-optimism. An over ambitious long stop date may even prejudice the IPT's negotiating position if the other parties decide to leverage additional concessions by manipulating the process to their advantage.
11. If the IPT knows that there is a possibility of the bidder's price validity lapsing during the next stage of the procurement it must take steps at appointment of the preferred bidder to address this issue and settle the basis on which any amendment will be made together with a methodology for assessing its impact on the project's overall affordability (more on this at paragraph 49 below).
12. Having a list of outstanding issues is - by itself - not sufficient. The Authority should further attempt to limit the scope of discussion on these issues. For example, if the proposed preferred bidder raises concerns about the level of indemnity that it is required to provide and its particular concern (as advanced in its bid) is say third party liability, then the issue that remains open for discussion is precisely that and not indemnities on a wider basis. The more detailed the list the better.
13. Scoping outstanding issues requires time and preparation. The output of the bid evaluation will produce a recommendation of preferred bidder. But it should also identify the areas of dissonance between the Authority's position and that of its preferred bidder that remain to be resolved - in that sense the Authority's preparation for the preferred bidder stage begins with the evaluation of bids at ITN or BAFO. All of the work that an IPT does at ITN and BAFO lays the ground work for this stage. IPTs that fail to capitalise on this ground work and view the preferred bidder stage as somehow "new" have missed the rationale behind using a competitive process.
14. The IPT must also decide when to de-brief the other bidder(s). It may wish to consider running a "reserve bidder" in which case the de-briefs can only occur once it has firmly settled on a deal with the preferred bidder and that deal has been approved as bankable by the lenders (probably after contract award). Running a reserve bidder is dependent on the willingness of that bidder to maintain a bid team. It will be unlikely to do so if it considers that the IPT is not running a tight ship in terms of the way of the procurement has been run to date. If the IPT has engendered confidence in its running of the process across its bidding community then it stands a better chance of having a credible reserve bidder.