procurement techniques - procure-project/EU-Contract-Hub GitHub Wiki

Procurement Techniques Guide

Overview

Procurement techniques are specialized methods and tools that contracting authorities can use to improve efficiency, achieve better outcomes, or address specific procurement challenges. EU directives provide for several techniques that complement the standard procurement procedures.

These techniques offer flexibility and specialized approaches for different procurement scenarios, helping optimize the procurement process for specific needs.

Framework Agreements

Agreements with one or more suppliers that establish the terms for contracts to be awarded during a specified period.

Key characteristics:

  • Duration generally limited to 4 years
  • Terms established upfront (prices, quantities, conditions)
  • No obligation to purchase specific quantities
  • Award of subsequent contracts without new procedure

Types:

  • Single-supplier framework
  • Multi-supplier framework with direct award (cascade)
  • Multi-supplier framework with mini-competition

Example: A government department establishes a framework agreement with three IT service providers. When specific IT projects arise, they can either directly award to the highest-ranked supplier or run a mini-competition among all three, depending on the framework terms.

Dynamic Purchasing Systems (DPS)

A completely electronic process for commonly used purchases that remains open to new suppliers throughout its duration.

Key characteristics:

  • Fully electronic process
  • Open to all qualifying suppliers throughout duration
  • Two-stage approach: qualification then mini-competition
  • No specific time limitation (unlike frameworks)
  • Must allow new suppliers to join at any time

When to use:

  • Recurring purchases of standardized items
  • Evolving marketplace with new suppliers entering
  • Need for flexibility in supplier selection
  • Long-term purchasing requirements

Example: A regional healthcare authority establishes a DPS for medical consumables. Suppliers can apply to join at any point during its 6-year operation, and specific orders are awarded through mini-competitions among qualified suppliers.

Electronic Auctions

Electronic process allowing suppliers to revise prices downward or adjust other quantifiable elements.

Key characteristics:

  • Follows initial full evaluation of tenders
  • Automatic evaluation methods only
  • Multiple rounds of bidding possible
  • Real-time ranking information provided to bidders
  • Can be used with open, restricted, and competitive procedures

When to use:

  • Price is a key award criterion
  • Specifications can be established precisely
  • Quantifiable elements suitable for electronic evaluation
  • Competitive market with multiple suppliers

Electronic Catalogs

Structured format for presenting products/services and prices, submitted electronically.

Key characteristics:

  • Standardized presentation of offerings
  • Can be required for framework agreements or DPS
  • Makes comparison of offers easier
  • Facilitates mini-competitions
  • Supports electronic ordering

When to use:

  • Multiple items to be purchased
  • Need for standardized presentation of offerings
  • Regular ordering from established agreements
  • Electronic procurement systems in place

Centralized Purchasing

Acquisition of supplies/services by a central purchasing body for multiple contracting authorities.

Types:

  • Acquisition for other contracting authorities
  • Award of contracts/agreements for use by others
  • Operation of centralized framework agreements

Benefits:

  • Economies of scale
  • Reduced administrative burden
  • Specialized procurement expertise
  • Standardization of requirements
  • Increased purchasing power

Example: A national central purchasing body awards a framework agreement for office equipment that can be used by all government departments, local authorities, and public bodies, achieving significant volume discounts and reducing duplication of effort.

Joint Procurement

Collaborative procurement where two or more contracting authorities conduct procurement activities together.

Forms:

  • Joint specifications and single procedure
  • Coordinated procurement with separate contracts
  • Cross-border joint procurement

When to use:

  • Similar requirements across multiple authorities
  • Economies of scale possible
  • Shared expertise beneficial
  • Cross-border opportunities relevant

Lots

Division of contracts into separate parts to encourage SME participation and increase competition.

Approaches:

  • Geographic lots (by region or location)
  • Functional lots (by product/service type)
  • Quantitative lots (by volume or value)
  • Timing lots (by delivery period)

Key rules:

  • "Divide or explain" principle (justify when not dividing)
  • Option to limit number of lots per bidder
  • Option to combine lots in certain circumstances

Example: A national office supplies tender is divided into regional lots (North, South, East, West) and product lots (paper, stationery, computer accessories), allowing smaller regional suppliers to compete for specific categories within their geographical area.

Innovation Procurement

Techniques specifically designed to encourage innovative solutions.

Pre-Commercial Procurement (PCP)

Research and development services procurement before commercial procurement.

Key characteristics:

  • Not subject to full procurement directives
  • Risk-benefit sharing between parties
  • Competitive development in phases
  • Separation from subsequent commercial procurement
  • Intellectual property rights arrangements

Innovation Partnership

Specialized procedure for developing and subsequently purchasing innovative solutions.

Key characteristics:

  • Combined R&D and commercial procurement
  • Structured development phases
  • Performance targets and cost parameters
  • No need for separate procurement for final solution
  • Partnership with one or more partners

Life-Cycle Costing

Technique to consider all costs associated with the life cycle of a product or service.

Cost elements:

  • Acquisition costs
  • Use costs (energy consumption, maintenance)
  • End-of-life costs (disposal, recycling)
  • Environmental externalities

Benefits:

  • True cost evaluation beyond initial price
  • Encourages sustainable solutions
  • Rewards quality and durability
  • Considers environmental impact

Example: In a vehicle procurement, life-cycle costing would consider not just the purchase price, but also fuel costs over expected lifetime, maintenance expenses, residual value, and costs of emissions.

References and Resources

For detailed information on procurement techniques, consult these official resources:

Related Wiki Pages