Once the preferred bidder has been selected, governments sometimes enter into further discussion, to finalize the PPP contract. Extensive negotiation at this stage can undermine the competitive tender process, as described in Section 3.5.1: Deciding the Procurement Strategy under 'Negotiation with bidders: post-bid'. However, some level of negotiation may be necessary, to clarify elements of the proposal or contract, particularly when the bid process has not included significant interaction. If financing arrangements have not already been finalized, lenders may also have demands at this stage that create pressure to negotiate on elements of the contract and risk allocation.
Many governments define and limit the extent of negotiations possible at this stage. For example, the EPEC's Guide to Guidance [#83, page 31] describes a European Union rule that no issues that are material to the procurement can be changed-that means that no change that could have resulted in a different result from the bidding process should be incorporated during the post-bid negotiation phase. Where changes are allowed at this stage, the final contract is often subject to further approval.
The following resources provide guidance on carefully managing post-bid negotiations:
• Australia's National PPP Practitioners' Guide [#16, page 30] provides guidance on setting up a 'negotiation framework' that includes, among other things, defining the negotiation issues and the timetable, setting the dispute resolution processes, and ensuring that the participants have the authority to make decisions on behalf of their organizations
• South Africa PPP Manual Module 5 [#219, pages 59-61] describes principles for negotiation, and the negotiation process
• ADB PPP Handbook [#8, pages 79-80] briefly describes important elements for negotiation-including having a fallback plan (which may be the second-place bidder).