Flexible procurement approaches that facilitate relationship change and negotiation: The use of the invitation to negotiate
| Pages | 173-193 |
| Published date | 01 March 2007 |
| DOI | https://doi.org/10.1108/JOPP-07-02-2007-B002 |
| Date | 01 March 2007 |
| Author | Wendell C. Lawther |
| Subject Matter | Public policy & environmental management,Politics,Public adminstration & management,Government,Economics,Public Finance/economics,Texation/public revenue |
JOURNAL OF PUBLIC PROCUREMENT, VOLUME 7, ISSUE 2, 173-193 2007
FLEXIBLE PROCUREMENT APPROACHES THAT FACILITATE
RELATIONSHIP CHANGE AND NEGOTIATION: THE USE OF THE
INVITATION TO NEGOTIATE
Wendell C. Lawther*
ABSTRACT. The effectiveness of innovative procurement practices,
illustrated at the US federal level by Performance Based Service Contracting
and other best value approaches, depends upon changes in the public
procurement organizational culture. These changes require agency officials
to establish new relationships with contractors, as the challenges of
acquiring complex as well as highly customized goods/services is best met
through flexibility and negotiation throughout the life of the acquisition.
Using procurement approaches that provide maximum flexibility provide
challenges to public managers, as choices regarding negotiation include the
content as well as the intensity and duration of negotiation sessions. The
use of the Invitation to Negotiate (ITN) approach by the State of Florida is
one example of an approach that allows flexibility and facilitates different
relationships with contractors. Two case studies, from the Departments of
Transportation and Management Services illustrate the use of ITN.
INTRODUCTION
In recent years, several innovative procurement practices have
become standard operating procedures within the federal
government (Pegnato, 2003). Performance Based Service
Contracting “where contractors are given the destination and then
challenged to come up with the best way to get there” has become a
priority of the Bush Administration (Government Accounting Office,
2003; Professional Services Council, 2004), due in part to the
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* Wendell C. Lawther, Ph.D., is an Associate Professor, Department of
Public Administration, University of Central Florida. His research interest
includes public procurement policy, public private partnerships, and
transportation policy.
Copyright © 2007 by PrAcademics Press
174 LAWTHER
incentives provided by the Services Acquisition Reform Act of 2003
(USGAO, 2005). Delivering the “best value” for federal departments
and agencies has been a priority since the Federal Acquisition
Regulation (FAR) rewrite of 1995 (Kelman, 2004; Qiao & Cummings,
2003). The recent federal Office of Management & Budget proposed
rule change supporting earned value management is but one of many
efforts to further emphasize this goal as a key aspect of public
procurement approaches (Palmer, 2005).
The long term success of these new procurement practices
depends upon a change in the organizational culture of federal
procurement: a change from the traditional ways of acquiring goods
and services (Welch, 2003). This change requires agency officials to
establish new relationships with contractors, as the challenges of
acquiring complex goods/services to meet agency goals is best met
through flexibility and negotiation throughout the life of the
acquisition (Schambach & Duke, 2004).
Two trends are increasing awareness and desire for this flexibility.
First, in the acquisition of information technology based goods and
services, the complexity of the end product/service, as well as the
means by which it is created, necessitates flexibility throughout the
pre and post contract award period. The acquisition of e-government
and information technology (IT) based systems have highlighted the
need for flexibility to avoid failure. Second, even if services acquired
are not complex, a need for customization1 to more specifically meet
agency needs can require flexibility that results in the acquisition of
higher quality services and products often at lower prices. The
acquisition of property leases, while governed by industry practices
and standards, also illustrates the need for customization to optimally
meet agency space needs.
Traditional public procurement approaches such as the Invitation
for Bids assume standardized uniform products and processes also
focusing on lowest bid or price. On the other hand, the use of the
Request for Proposal allows for a widely varying approach to the
extent of and content of negotiation that can occur. The approaches
permitted under the RFP vary from the federal approach, which
permits negotiation prior to contract award, to an approach found in
the State of Florida, for example, that does not permit negotiation.
At the federal level, FAR 15.306(d)(3) states:
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