Don’t be shy: Spot the risks and engage

Dialogue iStock 000009191235XSmall 146X219Sophie Kavanagh considers important developments in contracting authorities' ability to consult the market pre-procurement.

For the first time, a contracting authority’s opportunity to consult the market before commencement of a procurement procedure, and what such engagement should look like, will become law. Market consultation will be a legally recognised key preparation stage of public procurement.

Since coming into force on 17 April 2014, Articles 40 (Preliminary Market Consultations) and 41 (Prior Involvement of Candidates or Tenderers) of Public Sector Directive 2014/24/EU should provide uncertain contracting authority buyers with a level of assurance that engaging with the market is an efficient, legal and commercial driver to achieve a successful public goods, services or works contract.

There are some challenges to market engagement, both with external providers and in-house trading units. Market consultation has never been illegal. But breach of the EU Treaty principles, notably transparency and equality, is. Risk aversion, a lack of sound market consultation experience, unnecessary bureaucratic approval processes and governance within public bodies have often impeded the realisation of truly innovative and commercial capabilities for public spending.

Article 40 is clear that contracting authorities "may for example seek or accept advice from independent experts or authorities or from market participants. That advice may be used in the planning and conduct of the procurement procedure, provided that such advice does not have the effect of distorting competition and does not result in a violation of the principles of nondiscrimination and transparency."

It is important, therefore, not only to comply with EU Treaty principles, but to be seen to do so. The expectations of potentially engaging suppliers should be well managed by the relevant authority. The engagement process should begin with a clear statement to all suppliers informing them:

  1. What the purpose of engagement is.
  2. That any information a supplier shares could be used to assist drafting the specification, may be subject to Freedom of Information requests and will not be treated as confidential or contractual.
  3. That engaging suppliers will not receive preferential treatment in any subsequent tender.
  4. That all communications before, during and after the pre-procurement engagement will be accurately recorded in writing.

Article 41 sets out appropriate measures contracting authorities must take to ensure competition is not distorted by the prior engagement of a future tenderer, which includes "the communication to the other candidates and tenderers of relevant information exchanged in the context of or resulting from the involvement of the candidate or tenderer in the preparation of the procurement procedure and the fixing of adequate time limits for the receipt of tenders".

A tenderer may only be excluded from a regulated procurement where there are no other means to ensure compliance with the duty to observe the principle of equal treatment. Article 41 allows such tenderers the opportunity or right "to prove their involvement in preparing the procurement procedure is not capable of distorting competition. The measures taken shall be documented in the individual report required by Article 84".

Contracting authorities will need to:

  1. Know what the necessary steps are to ensure participation of a consulted company will not affect competition under the subsequent tender procedure.
  2. Ensure that information to which a consulted company is a party should be sent later to all participating bidders in the subsequent tender.
  3. Know when they can consider excluding a consulted company from bidding in a subsequent tender.
  4. On conclusion of a consultation exercise, assess whether they can guarantee equal treatment for all subsequent bidders.

Sophie Kavanagh is a Solicitor in the Projects department at Essex Legal Services. She can be contacted on 07881 310740 or This email address is being protected from spambots. You need JavaScript enabled to view it.