Understand the Preferred bidder's Pricing Structure

49.  In order to police any shifts in price by the preferred bidder the IPT must understand how that price was built up initially and what the effect of the proposed change will be. All bidders should have been required to break down their headline NPV figure for the project into its constituent elements. The level of granularity that is required should be sufficient to enable the impact of any re-pricing to be understood on a "before" and "after" basis and equip the IPT to ask sensible questions about any other additional costs which may have crept in. At the very least, the following components should be isolated:

50.  It is not uncommon (however hard an IPT tries to police the Authority's output specification) for changes to be made to it during the uncompetitive stage. It is equally common for preferred bidders to attempt to fix faults in their pricing strategy at the same time - using the re-opening of the output specification as a pretext for fixing (or even adding to) costs which they had originally got wrong. If the IPT understands the basis on which the bidders' bids have been put together then there is much less scope for "re-pricing creep" to occur.

51.  If a bidder has made a mistake in its pricing strategy it is far better for this to be raised transparently with the IPT. A sensible discussion can be then be had on whether the fault is so great that it would have materially altered the decision to down-select, what (if anything) can be done to address the bidder's concerns and whether this should include some element of re-pricing. The Authority does not want to be locked into a long-term deal with a bidder who (having made an honest mistake) is driven to look for cost savings which may prejudice service levels but, equally, does want to be exposed to massive uncompetitive re-pricing. A balance needs to be achieved between understanding and accommodating errors and ensuring value for money. This balance can only be achieved if the bidder is open and frank regarding its pricing and the IPT is clearly best positioned to require this behaviour through its dealings with all bidders prior to selection of the preferred bidder. Any re-pricing also needs to be assessed in the context of the overall deal and the ebb and flow of concessions that occurs during negotiations. Each issue needs to be assessed on its merits but it would be naïve of an IPT to think that a "score card" was not being kept of concessions and the IPT should certainly have one eye on the ground that it might be prepared to give in principle (once satisfactory agreement has been reached on all other outstanding issues).