Flexible Procurement Approaches That Facilitate Relationship Change and Negotiation: The Use of the Invitation to Negotiate

Summary

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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.

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Flexible Procurement Approaches That Facilitate Relationship Change and Negotiation: The Use of the Invitation to Negotiate

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 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...

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