Negotiations

Negotiations, in public procurement, are exchanges between a procuring authority and one or more bidders. Their purpose is to reach agreement on the requirements, terms, conditions, price or other elements of a solicitation or proposed contract before award. They take place inside a structured process and are not an open invitation to rewrite the requirement.

The term is used in NATO procurement, in Canadian federal procurement, and in procurement governed by domestic or international trade agreements. Related terms include discussions, competitive range, negotiated request for proposals (NRFP), consecutive negotiations, concurrent negotiations, best value and contract negotiations.

How NATO defines negotiations within the competitive range

NATO's procurement manual describes negotiations as the most detailed exchanges between NATO and bidders. They occur after the competitive range has been established, and the manual separates them from less extensive exchanges.

The same manual states the primary purpose of discussions: to maximize NATO's ability to obtain best value. Its objective is complete agreement with the bidder on, and understanding of, the basic requirements of the solicitation. Suppliers responding to NATO solicitations should expect negotiations only if their offer is within the competitive range.

When Canadian contracting authorities may negotiate

Public Services and Procurement Canada (PSPC) and other federal contracting authorities may negotiate after a solicitation when the applicable procurement rules permit it. CanadaBuys guidance states that when two or more compliant offers do not represent fair value, the contracting authority may consider negotiating with all compliant offerors or cancelling and reissuing the solicitation.

For competitive procurements not subject to trade agreements, negotiations may occur before evaluation is complete with all compliant offerors. They may also occur after evaluation with one offeror in specified circumstances. The same guidance says negotiations should generally be avoided when a request for quotation was used for a competitive procurement.

Trade agreement limits and disclosure of the process

For competitive procurements covered by trade agreements, negotiations must comply with the applicable agreement. CanadaBuys names CETA Article 19.11, Article XII of the WTO Agreement on Government Procurement, and the negotiation provision of the Canadian Free Trade Agreement.

PSPC's 2025 study of Negotiated Requests for Proposals identifies consecutive and concurrent negotiations as formats used in Canada. It states that the negotiation process must be disclosed in the notice of intended procurement. Its rules must also be transparent and consistent with the published evaluation criteria.

Negotiations in contract award and Treasury Board policy

CanadaBuys treats negotiations as part of contract award. Once negotiations on all proposed contract conditions are complete, the contract-approval document must be submitted for approval at the appropriate level.

The Treasury Board Directive on the Management of Procurement requires procurement professionals to use business acumen and negotiation skills when developing contract terms. It also requires them to revalidate market analysis before negotiating extensions of non-competitive procurements.

What negotiations mean for a supplier bidding on Canadian public contracts

Read the solicitation first to see whether negotiations are permitted, intended or excluded. Follow the published negotiation process, deadlines, evaluation criteria and rules. Submit a compliant offer, because negotiation with all offerors is open only to those whose offers are compliant.

• Be prepared to clarify or revise the aspects of your proposal that the process permits.
• Make sure every negotiated change is reflected in the final offer or contract documentation.
• Treat negotiations as governed by the applicable trade agreement and the solicitation's conditions.

Do not count on negotiating a request for quotation, since federal guidance says negotiations should generally be avoided there. Price your first offer as if it may be the only one you get.