Negotiation Phase

The negotiation phase is the defining characteristic of the competitive procedure with negotiation. It is the period between the submission of initial tenders and the invitation for final tenders, during which the contracting authority holds structured bilateral discussions with each shortlisted supplier to refine and improve their offers. It is not the same as commercial horse-trading: EU procurement law sets strict procedural constraints on what can and cannot be discussed during this phase.

What is the Negotiation Phase?

Under Article 29 of Directive 2014/24/EU, the negotiation phase takes place after initial tenders have been submitted. The following rules apply.

Minimum requirements are fixed. The negotiation phase may not modify the minimum requirements set out in the contract notice, the invitation to participate, or the tender documents. These form the irreducible core of the contract and define the outer boundary of what negotiation can achieve.

Equal treatment is mandatory. All shortlisted suppliers must be treated equally throughout the negotiation phase. Information provided to one supplier that is relevant to the preparation of tenders must be communicated simultaneously to all others. Sharing the substance of one supplier's proposed solution with a competitor is prohibited.

Confidentiality of proposals. The contracting authority must not reveal to other participants proposed prices or other information shared by one participant without that participant's consent.

Progressive reduction is permitted. The contracting authority may, if it announced this in the contract notice or invitation documents, reduce the number of tenders to be negotiated by applying the published award criteria. This allows the authority to eliminate less competitive initial tenders and focus negotiations on a smaller field.

The negotiation phase ends when the contracting authority issues the invitation for final tenders. The authority may negotiate on price, methodology, technical approach, delivery terms, risk allocation, and other commercial and technical aspects, as long as these are not among the fixed minimum requirements.

Why it matters for bidders

The negotiation phase is the stage at which listening skills, responsiveness, and preparation matter most. Unlike the open procedure where your first submission is your only submission, the negotiation phase gives you direct feedback from the buyer about what is valued, what concerns them, and where your initial offer needs to improve.

Effective negotiators prepare for this phase before the first session. They know their cost floor, their best alternative to a negotiated agreement, and which elements of their technical proposal are flexible versus fixed. They also prepare questions for the buyer that help them understand the evaluation priorities more precisely.

Example

An Italian hospital authority runs a competitive procedure with negotiation for a ten-year facilities management contract. After receiving initial tenders from four shortlisted suppliers, it holds separate negotiation meetings over six weeks, discussing each supplier's maintenance methodology, staffing model, performance guarantee terms, and pricing. Two suppliers revise their technical approach substantially; all four revise their prices. The authority then issues the invitation for final tenders, which it evaluates on quality (50%) and total cost of ownership (50%).

Frequently Asked Questions

Can a contracting authority negotiate after final tenders are submitted?

No. Once the invitation for final tenders has been issued, the process moves to evaluation. The contracting authority may ask for clarification of final tenders but cannot negotiate their substance. Introducing material changes after final tender submission is a procurement breach.

Is the negotiation phase the same as the dialogue phase in competitive dialogue?

No. The dialogue phase in competitive dialogue aims to develop the solution itself, because the buyer cannot specify it in advance. The negotiation phase in competitive procedure with negotiation refines offers against a specification that was already defined at minimum level before negotiations began. The negotiation phase is more tightly constrained.

How many rounds of negotiation can there be?

The directive does not specify a maximum number of rounds. The authority determines when negotiations are complete. In practice, two to four rounds are common for major contracts, with diminishing returns as offers converge.

Can a supplier withdraw during the negotiation phase?

Yes, a supplier may withdraw at any time. Withdrawal before the final tender stage means the supplier receives no award consideration. In practice, withdrawal is rare because suppliers have already invested significant effort in reaching the negotiation phase.