1.6 Develop Procurement Strategy

An overall procurement strategy should be documented and authorized for the NPP procurement. There are two basic methods of obtaining bids: open tendering and selective tendering. In open tendering any interested party can submit bids, while in closed tendering (also called selective or restrictive tendering) only specific bidders are invited to submit tenders. A comparison of the two from section 3.6.1.2 of NP-T-3.21 is as follows:

“Open tendering provides transparency to the procurement process, ensures good competition, and minimizes potential for collusion. It does tend however to drive decision makers to a lowest cost solution (apparent or submitted) if care is not taken to carefully evaluate all factors (reliability of bidders, quality, lifetime or life cycle costs etc.). Some jurisdictions or treaties require all or some public sector procurement to follow an open process. Examples of these are the European Union directives covering procurement, including Directive 2014/25/ covering the energy and other sectors, and the World Trade Organization’s agreement on government procurement.

Selective or restrictive tendering has the advantages of having reduced costs and duration of tendering, ensures only capable contractors bid (assuming there is a track record of successful work between the customer and client), and helps maintain the contractors economically viable through a regular stream of work. It does however have the disadvantages of potentially introducing complacency into the bidding process if selected contractors are routinely successful (prices may rise, less attention given to the work, etc.), misses the potential for new (more eager or otherwise better) suppliers, and increases risks of collusion among routinely successful contractors (they may keep prices high or divide up work among themselves). ‘Single source’ requests for quotations are a sub-set of this process. Such a selective or single source process is becoming more common for nuclear projects in the form of intergovernmental agreements, but does carry these increased risks.”

Individuals responsible for the NPP’s procurement should evaluate the pros and cons of the procurement methods, provide a recommendation and associated risk mitigation actions to senior decisions makers, and obtain their approval of the method chosen.