How do you design a competitive procurement process?
This page was updated6 months ago
How procurement processes are designed will have an important influence on whether competition is encouraged and whether anti-competitive conduct is discouraged in the procurement.
If you are new to the role or to the market, learn about the market. Gather information about the products, suppliers and conditions in the marketplace, especially potential suppliers’ prices and costs. Include information about prices in other geographic areas or for similar products. Collect information about past tenders, and, if in the public sector, seek information from other public procurers who have recently purchased similar goods or services, to improve your understanding about the markets.
Procurement processes should take into account the longer-term impacts of the award of a contract, not just the immediate tender. An unconsidered or purely short-term focus can negatively affect competition in the market in the long term. For example, the award of a long term contract can support efficiencies and investment by a supplier, but if that contract is awarded to one supplier and is large relative to total demand in the market, it can also reduce the amount of competition that exists in the market in the future.
You may also want to consider whether contracts can be awarded to multiple suppliers or whether a panel of suppliers can be selected. This may support expansion or entry into the market by smaller suppliers.
You should also ensure that procurement criteria is not more onerous than required so that it restricts the amount of suppliers that may be able to tender for the work.
Keeping and retaining procurement data
Keeping and retaining good quality and easily accessible data can help with achieving competitive procurement as it allows procurers to assess competition and other trends such as input costs, assists in making procurement design decisions and detecting anti-competitive behaviour.