BALANCED PROCUREMENT

-THE ART OF SHARING AND

LEARNING
Tanja Huse-Fagerlie, Master of Science in Economics at
University of Vxj, Sweden. Senior advisor at the
Agency for Public Management and eGovernment
(DIFI) in Norway.
ABSTRACT
By the use of dialogue, public contracting authorities
(CAs) will understand the economic operators (EOs)
challenges, as economic operators will better know
their contracting authorities and their actual needs.
During 2015, Agency for Public Management
and eGovernment launched a practitioner oriented and
innovative sector-based tutorial arena. This new way of
collaborating in order to identify risk factors to
improve procurement processes, from planning to
follow-up, has been a success. The groups of CAs and
EOs met at a regular basis and jointly identified areas
that need improvement, e.g. minimum requirements,
award criteria, contract management.
Their work results in real tender competitions
following regular procedures open to all suppliers.
Dialogue as an effective methodological tool will be
applied to various sectors.
INTRODUCTION
Public procurers have long expressed their
need for an arena for sharing experiences with other
procurers. Questionnaires from the Agency for Public
Management and eGovernment (Difi) and
the
Norwegian Association of Municipalities (KS) also
requested this arena for knowledge sharing. The
procuring profession carries great responsibilities, and
the procurers often work alone with little collaboration
with fellow procurers. Errors in the procurement
process have great consequences for finance and
logistics in an organization. It can lead to damaged
reputation and a weakened position. Since 2008, Difi
have established networks and published guidance
material to achieve the Good Procurement1. Difis
main target group is the public sector. However, to
meet the goals in the Good Procurement we have
over the past two years, targeted EOs to the public
sector as well.
The EOs have warned that numerous barriers
prevent public sector from acting as an intelligent and
informed customer. Over the las few years, national
supplier organizations in Norway have

Norwegian Governmental publication (2008-2009)

warned that more and more EOs are making the

strategic choice of NOT submitting offers in public
tenders. This is based on the notion that public tenders
are more complex and detailed, and costs involved in
preparing the offer becomes exceedingly high. In the
surveys performed by Difi2 among EOs participating in
public tenders, only 1/3rd is invited to status meetings
and dialogue with the CAs in a contracts lifetime.
To counter this lack of dialogue, Difi launched a
new arena for learning in 2015. This arena was
sector specific and linked directly to actual public
procurements. The purpose was to provide the CAs and
EOs with tangible and relevant experience and learning
on a joint platform, adding synergy to the target groups.
In Norway, all public procurements are
performed in accordance with national legislation,
known as the Public Procurement Act3 (the Act) and
the Public Procurement Regulations4 (the Regulation).
The legal framework is regarded as complicated for
both EOs and CAs. The scope of action for the Good
Procurement that is meant to exist within the
legislative framework, is difficult to find for the public
procurer. It is equally difficult to understand for the
private supplier. Sadly, the focus has been on the
boundaries of the Act, and of the consequences of
breaches of the Act. This has created a culture of
skepticism that has in turn made the scope of action
seem dubious and dangerous. The result is a general
distrust between the CAs and EOs. Too many no longer
dear speak to each other face to face, and
communicate predominantly in writing.
Dialogue is a highly effective tool to reduce this
distrust, but the dialogue techniques must be learnt in
practice to be effective. We know that it is possible to
perform good public procurements within the
legislative framework, while following the principles for
equality and predictability, and at the same time
conduct dialogue between procurer and supplier. When
the participants have a good knowledge of the legal
boundaries, the dialogue can focus on the techniques
and knowledge of the actual procurement. The
foundations of good dialogue techniques are returning
to the entrepreneurial spirit, being innovative and
building trust between the involved parties.
As stated, applied dialogue can be learnt only by
practicing
physical
dialogue
activities.
Through
dialogue the procurer will discover the potential that
exist in the marked, identify actual needs, and make
sure that the delivery is optimal and in accordance with
the contract.

National survey in 2015. Only available in Norwegian. Sent on request

3
4

LOV 19990716, No. 69 (last rev. 2012)

FOR 20060407, No. 402, last rev. 2012

Dialogue is a useful tool in a great number of

procurements, but in which business sector is dialogue
most interesting and relevant? Difi have experienced
that procurement for standard off- the-shelf products
such as copy paper and pencils, then a simple market
analysis usually is sufficient. Procurements in a
business sector, where development happens fast, or
in a complex service procurement, then dialogue is
important for understanding the market dynamics.
The CAs specifically need to understand what is
possible to develop and the complexity of the market.
At the same time, dialogue reduces the risk
associated
with
complicated procurements
and
development projects. Dialogue is also important, and
relevant, for procurements where the CAs have
needs where knowledge of these needs are important to
enable EOs to offer optimal coverage.
Difi also recognizes a number of procurements
where
dialogue
is
beneficial
to
emphasize
environmental issues or communal responsibility
through the procurement. One example from the
Norwegian Municipality City of Stavanger: The city
needed to establish a new centralized automation
system for operation and control of all technical
computer systems. They assumed this must be
developed from scratch, and at a high cost. Market
dialogue showed that a system did in fact exist, which
changed
the
procurement from an expensive
development project to an ordinary procurement. This
insight would not have been possible without the
experience gained through dialogue.
Norway is not the only country that has
experienced that dialogue between CAs and EOs result
in better competitions, tenders and offers. Increased
dialogue have resulted in better procurements in
Denmark, Ireland, the Netherlands and the UK. Difi
could therefore see a pattern where the procurers who
had reached the best solutions, also performed the
most extensive dialogue activities.
We decided to use the knowledge we had gained,
to form a system that could be applied and taught to
all CAs and EOs in Norway. Could we create a model
and a seminar structure, regardless of business sector
or procurement type? There are seminars that target
either the procurer or the supplier, but we wanted to
create an arena that would be the first having a parallel
scope. The Arena would build a bridge between the
theory taught at the seminar, and the actual
application of that theory to actual procurement
processes once the seminars were concluded. We saw
that we needed to build a system and a seminar that
dealt specifically with this gap. The solution was to
limit the seminar to one trade/industry at a time. By
doing this, we were able to create two parallel paths,
one for the public procurers and one for de private

suppliers. The path for the EOs was created to ensure

that their knowledge and understanding of the tender
process evolved in

the same way and to the same extent as for the

procurers. The EOs would also be able to learn about
and test in real-time the dialogue activities, with the
help and guidance of the national guides for public
procurement.
ISSUE
Within the framework of the primary statement
in the introduction, we developed the following key
objectives that we wanted to test through a Best
Practice case study of dialogue activities:
Can dialogue activities truly give the public
contracting authorities an understanding of the
economic operators challenges?
Can dialogue activities truly give the economic
operators a
better
understanding
of
their
contracting authorities and their actual needs?
Can the framework of this dialogue arena be
applied to public competitions in all sectors as an
effective, methodological tool?
METHODS
Difi created an educational arena as an optimal
arena for practicing the applied dialogue. In this
concept, both the procurer and the supplier are
guided through dialogue activities before, during, and
after the tender. At the same time, they are trained in
various dialogue techniques to experience how to
cope with the boundaries for dialogue in the various
stages of the procurement process.
Difi
also
used
structural
quantitative
questionnaires to collect the data from the participants
from both the CAs and EOs. The EOs participants
were sales professionals from the private sector and
the CAs procurement professionals from a wide range of
public
organizations
throughout
Norway.
The
procurement
professionals
answered
the
same
questions before and after the pilot. In addition to this,
we did continuous observations throughout all of the
seminar sessions. Employees at Difi did the
observations. We also analyzed their sessionsatisfaction responses through Individual quest back
questionnaires after each of the three sessions.
The method of Balanced procurement (BP):
BP is based on the Carlson & Wilmot (2006)
NABC-model and Dagestad (2014) BLT-method. Difi
wanted to retain the innovative technique from the BLTmethod while including the marketing perspectives
from the NABC-model in the nationally

approved procurement process that is being

distributed through Difis guiding.
The purpose of BP was to show that the use of a
multi-step of dialogue techniques enables the
successful completion of the CAs actual needs in the
procurement. This allows the procurement to overcome
the obstacles of not talking to each other, which had
been the problem for many years.
Participants from the public sector completed
an actual procurement during, or in close proximity, to
BP. Thus, the practical and operational aspect of the BP
was essential. Participants from the supplier side
brought their knowledge of the market to BP and gave
feedback to their competitors through dialogue
activities.
Test and control cycles
All the dialogue activities in the model were
organized to make the participants learn and
experience both of the circular test/control functions
during the procurement process. In the precompetition stages, we identified the following
dialogue activities: Need Solution Test. In the postcompetition stages, we identified
the dialogue
activities: Contract - Delivery Control.
The goal of these activities were not to just
lecture the participants, but to let them experience
that the potential in the procurement increases with
every time a test/control cycle is conducted.
Pre-competition dialogue:
The participants in BP wereed to
challeng continually test the quality oftio
their own descrip and understandingn
of their needs. They w then findoul
solutions to these needs and td
through
dialog,
whether
theseest
solutions met t needs or not.
When the participants use the first forgotten
step; test, they will experience a maturation of the
attitudes
that
influence
their
perception
and
understanding of their own needs as well as the
other parties needs.
Post- competition dialogue:
The participants in BP were in
ssion
se three challenged to find best fo
r
practice continual evaluation of
hei
whether or not t
Contract was implemented wellr in
enough their own organization. Thelso
evaluation was a to include whetherween
or not the interface bet
EOs and CAs was defined to ensure optimal

delivery.

In the delivery phase of the procurement it is

important for the EOs to continually use the second
forgotten step; control which provides a
maturation of the attitudes that influence their
perception and understanding of the consequences that
follows the demands set in the contract for both
parties.
Need:
Strategic objectives and national trade considerations:
To fully understand the need of the
organization it is necessary to perform an analysis and
form an understanding of the situation that forms the
backdrop for the need. This includes understanding
the strategic policies applied to the organization, on
both the macro- and micro level. This must also include
overarching possibilities in the market, as well as the
consequences of not meeting the need or change
the now-situation.
Clarify needs and prepare for the competition:
When the overarching conditions have been
mapped and understood, the procurer can begin
analyzing the CAs actual need. Through a continual
dialogue with the market, the procurer will better
understand the markets challenges and present state.
An effective dialogue allows the market to understand
what the procuring agency actually needs, and not
just what the procurer defines as solutions and
detailed requirements. This is a case of COURAGE and
TRUST. The procurer must have the courage to trust
that the market will understand the needs of the CAs
and trust that the market wants to fulfil these needs. It
is vital that the market tests your needs and gives the
procurer feedback on adjustments that is required in
the description to arrive at a good final solution.
Solution:
Clarify needs and prepare for the competition:
The tender must explain the CAs needs well enough.
It must also be sufficiently open so that the EOs can
present an offer that actually fulfils the needs described
by the procurer.
Test:

Once a draft for the tender has been formulated, it must be

tested before it can be published. This can be done in

many ways depending on the level of market
understanding possessed by the procurer. The results
of the test forms a revised definition of the need
which in turn leads to an evaluation of the solution.
There are several types of testing/ dialogue
activities to choose from, such as supplier-conference
to inform of upcoming competitions, market surveys,

dialogue meetings and dialogue conference regarding

the specific competition at hand, one-on-one meetings
and sending the competition for a consultation with
the

market. When these steps are completed, and the

procurer is certain that the competition meets the
needs, and the market is able to understand these
needs well enough to provide satisfactory solutions, the
tender can be published and the competition begin.
Competition:
The greatest test of all takes place during the
competition itself. In this phase, the EOs may use the
available openings for Q&A, as well as attend
interviews, conferences or on-site inspections as the
CAs may choose to arrange. Once the offers have been
received and evaluated, and a winner have been
found, BP opens for dialogue between suppliers and
procurers once again. Dialogue to ensure learning for
both the winning and the losing bidder is vital to reduce
suspicion, uncertainty and levels of conflict, and gives
confidence for all involved parties that the procurement
process has been handled correctly.
Delivery and Control:
Implementation of the new contract must be
conducted in close cooperation between the CA and
the winning EO(s). In this phase, it is important to
determine the mutual levels of expectations for the
duration of the contract. A balanced agreement of
interface, or Service Level Agreement (SLA), must be
made familiar in both the CA and the EO. Dialogue is
essential to create and sustain a close cooperation
throughout the contract period, and to strengthen you
as a customer. It is also important for the supplier as a
prospective future winner of the next competition.
During the contract period, ALL the demands in the
competition must be checked and ensured fulfilment.
All involved parties must be trained in the relevant KPIs
and how these will be measured throughout. If you are
not going to control the demands in the contract, there
is no need to make the demand it in the first place.
Prior to contract conclusion there is once again room
for, and a need for, dialogue activities to evaluate the
contract as a whole, to learn from experiences gained
and build a solid bridge to the new contract, regardless
if todays supplier have won this competition or not.

We have designed the BP-model in the shape of a

bicycle to illustrate how the two circular phases of the
process
are connected;
the delivery must
Figur 1: Balanced procurement procurement
(Bicycle) model, T.
Huse-Fagerlie
(2016)
always be based on the contract, the contract must be
based on the winning offer and the published tender,
which is in turn based on the defined need. The
often forgotten activities; test and control, ensures that
each step is built on the previous step. If one step is
missing, then the whole process may miss its target or
even collapse.
The bicycle also embodies the much known
quote of Albert Einstein: "Life is like riding a bicycle. To
keep your balance you must keep moving".

RESULTS
Balanced Procurement the Art of Sharing and
Learning turned out to be an arena for more than just
growth in knowledge. It became an arena for evolving
attitudes based on theoretical learning combined with
hands-on experience of dialogue activities throughout
the procurement process. The results of BP can be
Figure 1: Purchasing maturity through
Theinto
Balanced
Procurement
arena
divided
five main
criterias
for success. This section
summarizes the main results per criteria.
Criteria 1 - The use of various learning techniques
The satisfactory response rate from our sessions
were above our expectations. This is partly explained
by the fact that the sessions combined several
techniques for learning. BP lets the participants
bridge the gap between theory and real life activities in
a safe learning environment. By doing this, we reduce
the threshold for using dialogue techniques in other
procurements later on. The high satisfactory response
rate is also partly because of the participants of BP
went through a development of maturity throughout
the sessions (Appendix 2). This journey is shown applied
in Van Weele (2010) Three levels of maturity below.

The Journey of Maturity of the participants was a

significant finding in the responses of the maturation
study. The change from the red points that marks the
answers from before the BP to the blue points that
marks the answers from after the BP is significant, proof
of the Journey of maturation.

Criteria 2 - Understanding the other parties situation:

Dialogue meetings prior to public procurements
in Norway is unusual. Luckily, this is changing, but the
rate of change is slow. BP emphasized real life training
of the techniques for market dialogue prior to the
competition. The results of these practical activities
were that both the procurer and the supplier became
confident in the theory and how to implement this in
their procurements. We already see a marked change
in the tenders and ways of publication for those
involved in BP. At the same time, we also see a
change in other competitions performed by procurers
who did not take part in the seminars. Both the EOs
and the CAs in the trade of industry is reporting a
rapidly growing practice of dialogue with the other
party. More surprisingly, we also see a clear change in
the award criteria is used, from price being valued at
80-100% before the seminars to price being valued at
40-60% on average after BP. The main award criteria is
used in in addition to price is now a definition of
quality that both sides find balanced. This definition
helps to find the unique and best offer that meets the
described need in the tender. We also see a wider use
of relevant environmental and social criterias.
Criteria 3 Building the bridge from theory to practice
The participants absorbed the knowledge in a
much greater degree than what we see in traditional
seminars where the participants learn primarily
through passively listening to lectures and monologues
from a teacher.
The user questionnaires prior to the BP arena,
showed the need to increase the participants
competence
and
confidence
when
addressing
procurement as a strategic task. The BP arena therefore
started with a comprehensive exercise before session
1 that included theory as well as practical tasks to
be completed and discussed in groups during the
session. The participants needed to learn what
consequences arise when they informed and matured
the market at an early stage, and how to generate
better cooperation with political leadership and
corporate leadership. After the completion of the
course, the results showed great improvements in the
attitude and confidence of strategic foundation of
procurement at an early stage of the process.
Difi have clear findings in that the more a
procurer learns, through empirical activities, to apply
the theoretical knowledge into important strategic
steps in the procurement process, the more
successful the interaction with the suppliers are. The
more the procurer learns about the theory on how to
communicate with the market at the same time as they
test the dialogue activities in real time, the more the

procurer appreciates the complexity of the market. This

finding is so profound that we hope to study it further
in future learning arenas, in other business sectors as
well.

Criteria 4 Taking a Leap of faith:

The importance of both CAs and EOs attending
the dialogue process together, rather than just reading
the outcome in case of a public tender is important to
build mutual trust. Both parties in a competition must
be allowed enough time and space to develop mutual
understanding of each others perspectives. By
gradually opening up the knowledge and experience
that dialogue brings to a competition, both parties will
develop their competence and break down their own
attitude barriers. By doing this, the participants laid the
foundation to let the dialogue became balanced and
without hidden agendas. Difi recognized that getting a
positive experience of having dialogue, would demand
the participants to develop courage enough to open
themselves further up and realize that this action would
be rewarded with more openness from the other party.
Criteria 5 - Snowball-effect:
These days the CAs competitions are being
published, and we notice that only 4 months after the
BP arena, the business sector of the pilot have passed
into phase 2; early adopters. In addition, the snowball
is just gaining more and more momentum. We believe
the trade may reach the category Early majority this
year, having registered a huge change in the
majority of tenders within the cleaning trade. Not only
are the competitions derived from BP more balanced in
the award criteria, but also the need definition is much
clearer. Absolute demands have been drastically
reduced in both the qualification demands and the
demand specification. National standards are being
used far more often and the EOs report that the general
procurement competence is now very good. We also
see that competitions run by procurers who did not take
part in BP have also changed. In this business sector,
there are now no competitions where price is evaluated
at 100% of the award criteria. There are however clear
demands for quality based on standardized measuring
methods, and complete solutions are being sought
rather than delivery based on a predefined detailed
specification.

DISCUSSION
The results of BP are divided into five main
criteria for success. As a basis for the empirical
findings, this section discusses The Journey of
maturation and relevant literature. The empirical
findings proves the importance of dialogue in the
procurement process. This paper aims to illustrate
how efficient dialogue activities paves the way to
unrestricted tenders and innovative offers. Difi
believes that a balanced dialogue will demolish barriers
related to processes, competence and collaboration in
public procurement.
Criteria 1 - The use of various learning techniques
Bohm (2004) recommends us to suspend
assumptions, and not to judge while listening to one
another. BP was created to allow the participants to
learn from each other through all stages of the Learning
Pyramid; from regular lectures and self-study, through
animated guidance, case work and discussion groups,
and to prepare them for the teaching role for sharing
their new knowledge and attitudes with their
colleagues. The participants were expected to develop
and refine a real tender based on the techniques and
the knowledge gained through BP. They were asked
to share their experiences and best practice with
each other and to criticize each others work.
Purchasing maturity is widely discussed in
academic literature. Extensive attention has been
lavished on the importance of purchasing; from the role
of internal service to the role of creating user
satisfaction. The intention of BP is to let the theories of
Rozemeijer et al. (2003), Schiele (2007), Gelderman et
al. (2005) and Van Weele (2010) form a basis of
anticipation upon which we could develop a safe
environment to practice different dialogue techniques.
The participants needed to be familiarized with these
activities to develop confidence in order to become the
teachers of dialogue in their own organizations. The
theories of Foerstl et al. (2013) and Paik (2011) claim
that
purchasing
maturity
enhances
purchasing
performance, supplier performance as well as the CAs
success. This view is supported by the research of
Cousins et al. (2006), Foerstl et al. (2013), Paulraj et al.
(2006), and Hartmann et al. (2012).
The Journey of maturation - Part 1
Many business sectors in Norway are weighed
down by a mutual distrust between EOs and CAs. The
EOs accuse the CAs of lacking procurement
competence, while the CAs accuses the EOs of
exploiting their lacking knowledge of the business
sector and thereby cheat them for money while
delivering poor quality. The EOs are therefore

requesting an arena where they can cooperate with

their
competitors
to
present
a
united
understanding of their

business sector to public procurers, to enhance their

procurement competence. The CAs is also requesting
an arena where they can cooperate with fellow
procurers for several years. This is why we created
the BP to stimulate to maximized dialogue (Appendix 1).
Before the first session, the procurers were
required to study the relevant curriculum with relevant
tasks as e.g. to define their own maturity level. They
were asked to identify the needs of their organization,
but also to reflect on the underlying situation
preceding their need. They were required to address
how they would ensure involvement from all interested
parties, while maintaining all
strategic frame
documents and to formulate strategic goals for the
upcoming competition. The procurers missed not
having other procurers to discuss with, who had the
same type of needs, to ensure that the strategic
goals for the relevant competition were met. Difi
facilitated these working groups, leading to a high level
of skill-maturation for the participants. The group tasks
included how to check qualification requirements
against strategic goals within their own organization.
The CAs learned how to perform situational analyses,
describe needs and strategic goals in the tender
document, and how to identify alternative award
criteria to 100% price.
During session one, the procurers learned to
define and follow correct Key Performance Index (KPI)
as described by Parmenter (2015). The theories
behind KPI are widely published, but few public
procurers know how to actually build the bridge
between theory and practice. The participants were
therefore trained to describe the KPIs in the tender and
then how to control them up during the delivery.
Another important activity was the Open Space model.
This activity was important for the maturation of the
participants, as the group assignments in the Open
Space gave the participants a deeper insight of the
perspectives to the other participants. It also gave
them a broader understanding of their own point of
view and a better position for making decisions in
the upcoming tender. The key learning points from the
first session was the realization of the procurers that
they had to change their requirement specification.
- from being strictly a detailed specification with an
evaluation at 100% on price
- to a specification based on function and
performance, a specification where the winner is
the
offer
that
is
the
most economically
advantageous tender.

Criteria 2 - Understanding the other side

Zeldin (1976) argues that The kind of
conversation Im interested in is one in which you start
with a willingness to emerge a slightly different
person. A survey conducted by CEB Marketing
Leadership Council, claims that 57% of purchases
are decided before the market are contacted. Some
have rejected these findings as exaggerated, but there
is little doubt that the old fashioned, entrepreneurial
market meeting, where the supplier and procurer have
to know one another, no longer exist.
Experiences from Norway indicate that EOs
seldom are involved in the procurement process until
they present their written offer to a tender. This has the
effect that the procurer have little, if any, knowledge of
what the market impact and consequences of the
tender will be. The procurer therefore seeks to minimize
its own risk by adding to the levels of details in the
requirements specification. When increased risk is
placed on the EOs, they will need to include this in their
overall price of the offer. Through a systematic market
dialogue, the procurer will be able to apply more
balanced award criteria, qualification and contract
requirements.
Dialogue has always been hard to accomplish in
the interface between procurers and suppliers. More
stringent adherence to legislation has also put a
limitation on the perceived scope of action. Dialogue is
often linked to suspicions of corruption and breach of
equal opportunities for all EOs. Many business
sectors
experience that
transparency
requests,
complaints, prosecution, and meetings merely between
the EOs and CAs legal advisors are barriers for the
balanced dialogue. This leads to vastly added costs for
the society, while the strategic goals of the
procurement are not fulfilled.

Figure 2: Initial meeting between the legal parties

Luckily, there have also been positive changes

in the way dialogue activities is practiced in public
procurements. This is particularly true regarding
innovative procurements, where the guides and
tutorials emphasize the effects of dialogue in the early
stages of the procurement. Lately we have been able to
define two main categories for innovative public
procurements; Innovation Friendly Procurement and
Procurement of Innovation.

BP
focuses
on
the
innovation
friendly
procurement. The main challenge is that neither the
procurer nor the supplier has the courage or the
resources to take full advantage of the room for
dialogue that already lies in the procurement
legislation. This indicates the importance of an arena
where both procurers and suppliers are taught
simultaneously, with joint dialogue activities. We have
repeatedly experienced that when development of
knowledge happens in seminars for one of the parties,
both CAs and EOs lose expertise and perspectives,
and will not be as open to development.
Martin Luther King jr. did not say: I have 6
overall goals that can be divided into 3 sub-goals, with
6 action points with correlating efforts. He merely said:
I have a dream! This is about being clear,
approachable and having a pronounced vision. The
procurers have to find ways of clarify their strategic
goals in a way the suppliers find easy to understand. To
practice on working towards this perspective, the
procurers were challenged to criticize each others
tenders and make sure the definition of need was
available and inviting. During BP, this approachable
way of explaining the need with the goal of increase
the competition between the EOs, lead to an
understanding of the importance of marketing
themselves as attractive customers. To underline this
perspective, the term sexy procurement was used
several times.
As stated by some of the participants:
Balanced procurement is also sexy procurement.
The Journey of maturation - Part 2
The knowledge and attitudes of the participants
changed through the course. We measured this through
19 questions asked both before and directly after the
BP arena (Appendix 1). Table 1 shows the participants
maturity towards dialog leading to less time spent on
the procurement process.
It delays the process
The process takes as long, but the time is
spent more wisely
Fewer questions/misunderstandings/
disagreements means less time is spent on the
procurement process

Before

After

11 %

31 %

22 %

38 %

67 %

31 %

Maturity

Table 1: How does increased supplier dialogue effect the time spent on the
procurement process?

Table 2 shows the participants maturation towards

confidence in using early dialogue prior to a
competition.
Before

After

Maturit

y
Open for feedback regarding the content and shape of the competition,
before publication
Never
14 % 0 %
0
Rarely
21 % 0 %
1
Some times
36 % 56 % 2
Often
29 % 44 % 3
Market dialogue prior to a competition in form of a meeting with one
supplier at the time
Never
21 % 0 %
0
Rarely
29 % 25 % 1
Some times
36 % 50 % 2
Often
14 % 25 % 3

Table 2: When do you use the opportunities for dialogue?

All the participants of BP agreed that price is the

dominant, and often the only, award criteria in public
procurements in their business sector. Both parties
agreed that this has a negative effect on the quality of
the delivery. Many participants believe standards will
help to make both the competition and the delivery of a
service more efficient. As long as the content of and
use of standards remains a mystery to many
procurers, then they will often find solutions on their
own. These homemade solutions are rarely balanced
and the market will react with suspicion and increased
prices. BP therefore had to provide a thorough
introduction to the existing national standards.
A common desire amongst the participants was to
use other award criteria than price. The term quality
was replaced by the question how much does a fish
weigh? The participants spent much time debating
this issue, and reached a common definition of what
quality meant, and how this could be measured
during the delivery. They also discussed and agreed on
how the tenders could open for the best offer to
quality as award criteria. The conclusion was that all
participants changed the view from price to a balance
between the price and quality. This increase in
purchase maturity after this second session is
explained by the participants ability to understand the
other parties situation. They became more aware of
What strategic goals did the other party have, and how
the results and effects could be measured? They
understood the advantage of use of standards, and
experienced the importance of communicating their
situation to each other to avoid misunderstandings
and prejudice.

Quote, Purchaser: I have found several

templates to be very useful, and in particular the
checklist for analysing needs and requirements
specifications. This can be used in a variety of
procurements.
Criteria 3 Building the bridge from theory to practice
Traditionally, educationalists such as Peters
(1967), argues: Education is fundamentally cognitive
whilst training is skills based. The BP arena is
combining the theory with practical training in dialogue
activities. Difis hypothesis was that a combination of
these two dimensions of learning brought a higher
level of competence. Learning is often seen as an
individual process, but Difi wanted to create an arena
for stimulating for this learning for all of public sector.
Jarvis et al. (2003) discuss this approach and that the
focus should be on that the providers of learning no
longer have to be educators of theory, but can also
be ways of facilitating learning effectively through
dialogue, the sharing of experiences and Best
Practice.
Difis guidance through e.g. theories, tools,
movies and Best practices fails in one critical phase; the
participants understand the theory, but are unable to
convert this to practical use. As Jarvis et al. (2003)
argues, the relationship between theory and practice
is changing, and we are now beginning to see
arguments about theory coming from practice rather
than the other way around. The role of procurement
within organizations has also changed significantly
from a transactional and commercial orientation to
one oriented towards strategy and focused on
delivering value, as van Weele & Rietveld (1998)
argues. Complex procurement is often projectmanaged and as in procurement of innovation, this may
be enacted successfully through the application of
appropriate project management techniques. Project
management
through
Prince2techniques
as
described from Office of Government Commerce
(2007) also influences the BP arena.
Procurement is increasingly regarded as a
strategic function in the organization, but evidence
reviewed by Zheng et al. (2007) suggests an uneven
picture in relation to procurers influence over corporate
level strategic decisions and managing relations in the
organizations. This suggests a mismatch in what the
role of procurement purposes to do and what
functional role it actually carries out in an organization.

The Journey of maturation - Part 3

Through theory and exercises, the CAs were led
through the Kraljic matrix. Evaluating strategies,
prioritizing and calculating the potential for the
procurement are based on the defined needs. The
results from this exercise was used frequently and
updated continuously during the planning phase. The
CAs also used the document to form hypotheses on
how to realize their goals and what questions to ask to
improve their knowledge about the market.
There was a clear split between the procurers
who found their competition in the two squares that
are defined by Using purchasing power and the
participants who wanted to Develop the value chain.
This split was unrelated to the geographical belonging
of the procurer or if the procurers were on council level
or national government in this regard. The split was on
the other hand based on the procurers experience and
confidence with dialogue activities. The most profound
findings of the course was that purchasers with little
prior experience with market dialogue placed their
upcoming tender as a volume purchase and a noncritical procurement at the beginning of BP. The majority
of the procurers shifted their attitudes and choice of
strategy as the course progressed from a strategy
based on purchasing power, where price, volume and an
expanded base of EOs was the primary focus. The
shift, as the procurers experienced cooperating with
the supplier market, went towards wishing to develop
the value chain and place their upcoming tender as a
strategic purchase or a bottleneck procurement. The
procurers now wanted to reduce and optimize their
consumption, develop the cooperation process and seek
to make the delivery more efficient by working closely
with the EOs.
Quote supplier: Efficient. Met many procurers in a short
amount of time. Saw different needs and ways to
operate. I believe we learned from each other.
Quote supplier: I found that sharing experiences with
procurers and learning how to write the best offers was
exiting.

Criteria 4 Taking a Leap of faith

Yeakley (1998) teaches us that Positive
attitude change (change in reduction of prejudice
and increased intergroup understanding) is related to
a supportive and intimate sharing of intergroup
experiences, while negative change is related to
painful experiences associated with the perceived
poor quality of the intergroup contact.
Swrd (2013) writes that early positive
encounters (before competition) create a safe context
for how trust evolves on other levels over time (the
contract period). Participants will constantly interpret
their environments and look for reasons to trust. If
uncertainty is too great, than taking this leap of faith
will seem too risky. Mllering (2006) argues that trust is
about interpretations and expectations and that the
participants constantly will form perceptions about
what is going on around them. Based on the
interpretations they will decide to trust or not.
Through practical exercises, the participants were
trained to have courage to make mistakes. They had to
identify their strengths and weaknesses, and often
these were first made clear to them in the dialogue
activities of BP. The dialogue activities often gave the
participants advice and training with the articulation
needed to achieve their desired strategic goals. The
participants were taught that clear and concise
descriptions leads to clear and concise answers. In
particular, they experienced that strictly written
communication, quickly leads to misunderstandings.
The CAs and EOs were asked to identify the relevant
needs and strategic purpose of the procurement, to
prioritize these and show knowledge and humility to
say: I dont know everything, can we discuss this
together?
Lindell and Bergstrm (2015) gives a practical
look on the principles of a successful procurement.
The book encourage the procurer to lift its gaze away
from legal challenges and limitations, and rather focus
on clear roll descriptions, good relations and wellfounded needs. The participants put into system
iterative and interrogative techniques of dialogue,
invented by S. Toyoda (1867- 1930) called The 5
whys, which is a simple tool for the participants that
help them to form a basis for interviewing the other
parties about their situation and inputs on the
upcoming tender. A fear of failing is often the primary
reason behind the choice to not take the Leap of
Faith. There are two types of errors; Active errors To
do something you should not have done. In this case,
responsibility lies with the person who have made the
mistake. The other type is Passive errors To fail to act
when you should have. Passive errors are often

invisible and are easy to get away with, but the

consequences are often great. It is harder to discover
and identify passive errors, and it takes a bigger effort
to change old habits that

causes these mistakes. The participants were forced to

break down all these barriers, as they were made aware
that their old ways, with no market dialogue, detailed
demand specifications and rewarding lowest bidder,
were riddled with passive mistakes.
The Journey of maturation - Part 4
Tabell 3, shows the participants maturity towards
dialogue, before, during and after the competition
Market communication in general
No
Yes
Next years procurement plans
No
Yes
An upcoming procurement
No
Yes
Status meetings during the contract
No
Yes

Before

After

62 %
38 %

0%
100 %

100 %
0%

67 %
33 %

71 %
29 %

11 %
89 %

8%
92 %

11 %
89 %

Table 3: Will you invite the supplier to discuss:

Both the theory and national guides have long

spoken of the benefits of this type of dialogue activity,
but suspiciously few meetings of this kind has taken
place, despite massive attempts at
increasing
knowledge and changing attitudes. The table 3 shows
that most of the CAs were not used to having dialogue
in the pre- tendering phases. Therefore, it came as a
surprise to witness the intensity and openness both
parties showed during the dialogue activities in the
BP arena. Both sides had prepared well and we
received reports of huge leaps in confidence levels
during this phase. They also reported a desire to
repeat this process and this type of meetings in the
future. This result is also shown in the After coulomb
in Table 3. The participants has maturated towards a
greater confidence in the benefits of dialogue.
Key topics
discussed during the on-on-one
meetings included strategic goals and how to monitor
these during the delivery, the design and limitations of
the actual demand specification, and how to use
models of evaluation. The suppliers were allowed to
display their new solutions and ideas, and the
procurers were given feedback and pointers on how to
open competitions up to innovative solutions. The
discussion revolved around possible solutions in
relation to the need as described by the procurer. The
meetings also allowed the supplier to ask investigative
questions that could not be answered in the
tender, but was

important to unlock dimensions behind the described

need. The procurers also took advantage of the
opportunity to give some general pointers to the
suppliers. E.g. to read the tender thoroughly and to
follow descriptions on how the offer should be
designed. Repeatedly the advice was to not include
documentation that were not requested.
Quote, procurer: I learned a lot from the
lecturers and received good feedback from the
suppliers. At the same time these short one-on-one
meetings was a good experience that I shall repeat on
my own later
Criteria 5 The Snowball effect
Rogers (2007) tell us that trying to convince the
mass of a new idea is useless in the Adopter
categorization on the Basis of Innovativeness. We
have to convince innovators and early adopters first,
and then the rest of the target group can copy. The
participants of BP have truly acted as innovators in
changing the way procurement is conducted in the BP
pilots business sector.
The Journey of maturation - Part 5
The procurers were asked which award criteria they
thought were best to evaluate the offers. During the
first session, both the procurers and the suppliers
found few alternative criteria to price. Previously there
were no good way of measuring quality in the trade, but
as the dialogue activities progressed, some new and
better definitions have emerged that even the suppliers
agree form a good way of measuring quality.
Best award criteria
Mainly Price
Mainly Quality
A balance between price and quality combined with
e.g. environmental and social responsibility

Befor
e
43 %
29 %

After
11
%
44
%
29 % 44
Table 4: What award criteria do you think is best to use evaluate the offers
% for
cleaning services?

To ensure that the entire business sector are

included in the behavioral change, the results of the
learning arena has to be strong enough to encourage
others to join in and thus create a snow-ball effect that
draws in the masses of operators in the business sector.
CAs that have not participated in BP are now copying
the essence from the published competitions made by
participating procurers. They are also using dialogue
activities in their own competitions as well after reading
the tender announcements on Tenders Electronic Daily
(TED), or at Doffin.no, the Norwegian Web-based
database for national tenders.

The EOs are also demanding more dialog

activities. Difi acknowledge that there have been a
shift in the EOs attitudes towards taking part in precommercial dialogue activities. In order to fully grasp
the scope of the exponential change in behavioral
change that BP is responsible for, we will continue to
monitor published competitions in Norway in another 6
months time.
A growing trend in the business sector after BP
is that the procurers announces a prior information
notice to the market to invite EOs to participate in
dialogue prior to publication of the tender. This action
is especially important regarding services and/or
complex product of tenders. The feedback from the
market has been very positive and both parties
experience great participation in more qualitative
tenders. The information notice should involve a
framework of the strategic tender goals of the buyer
organization. The procurer should request input from
the potential suppliers on how the tender and contracts
should be formulated. It is important to stress that the
procurer is not obligated to emphasis the suggestions
from the market. In the end, it is always the procurer
who decides what the end announcement will be. An
arising number of sectors in Norway have now seen the
consequences of this arena, and are now eager to
adopt this model to their business sector. Difi is
therefore planning to use this concept in both national
guidance as well as in different arenas in other sectors
over the years to come.

FINAL COMMENTS AND CONCLUSIONS

Balanced Procurement The art of sharing and learning
has been an arena for evolving attitudes based on
theoretical
learning
combined
with
hands-on
experience of dialogue activities throughout the
procurement process. The satisfactory response rate
from our sessions were above our expectations due
to the combination of several learning techniques witch
led to a maturity towards the use of dialogue that
exceeding all prior experiences.
The arena has led to a clear change in the
award criteria used in the tenders that follows. The
more a procurer learns, through empirical activities, to
apply the theoretical knowledge
into important
strategic steps in the procurement process, the more
successful the interaction with the suppliers are. Getting
a positive experience of having dialogue, is giving both
parties courage enough to open themselves further up
and realize that this action will be rewarded with more
openness from the other party. Balanced Procurement
drastically reduces absolute demands in both the
qualification demands and the demand specification,
leaving the competitions more balanced in the award
criteria and the definition of need much clearer.
Balanced procurements has absolutely given CAs
a better understanding of the EOs challenges. "If you
want to be fast - go alone, but if you want to get far go together"5. The dialogue can inform you of the
opportunities that lies in the market and give you
knowledge of the market in which you operate.
However, dialogue is also a tool for maturing the
market. Spending more time on dialogue, saves
spending time correcting errors and arguing over
misunderstandings. Good contract control ensures
correct effects and target achievement for the CA, and
failure to prioritize this work can be costly for the
company. The achieved goal is that the procurer have
learned both the value of dialogue and the
consequences of the choices made in the various
phases of the procurement process. Balanced
procurements is also giving EOs a better
understanding of the CAs needs. When the suppliers
are kept informed throughout the procurement
process, the trust in the CA increases. The achieved
goal is that the supplier has learned the value of
dialogue and the consequences of the choices made in
the various phases of the offer process. In addition,
both parties have achieved a higher level of confidence
and knowledge of the scope
of action, and the boundaries of dialogue in the public sector.

The profile of Telenor Norway (March 2015)

Difi has realized that the Balanced Procurement

model is a highly effective, methodical tool. Difi is
therefore planning to launch the Balanced Procurement
model as the framework of national guidance of
innovation dialogue techniques in Norway after
presenting this paper at IPPC7 this august.
Further research
Balanced Procurement has been so successful on
a national level in Norway that Difi has decided to
apply it to other business sectors. In coming years,
the Balanced Procurement concept is scheduled to be
applied to business sectors such as complicated
software solutions, consultancy services and medical
supplies to the health sector. We also see a huge
potential for further research as Balanced Procurement
takes place in the dynamic dialogue interface
between CAs and EOs. The arena is limited to one
business sector at a time and on a national level rather
than just a few single organizations. In addition to this,
Balanced Procurement follows the entire procurement
process, both before, during and after the actual tender.
This allows for added documentation of the
proceeding consequences of Balanced Procurement,
both as a model and as an arena for learning. We
therefor hope that Balanced Procurement can form a
foundation of further research into the consequences of
the dialogue activities in public procurement.
NOTES
1 Norwegian Governmental publication (2008-2009)
2 National survey in 2015. Only available in Norwegian. Sent on request
3
LOV 1999-07-16, No. 69 (last rev. 2012)
4
FOR 2006-04-07, No. 402 (last rev. 2012)
5 The profile of Telenor Norway (March 2015)

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Appendix 1: Balanced Procurement

- A structural overview of the concept agenda

Session 1 - Suppliers (planning sales and

marketing) Theory, 3 hours:
Prior to offer + NABC-model
Group assignment, 3 hours:
Prepare remarks from the business sector to the OA regarding:
Remarks on the demand specification
Information on the market situation in general
Prepare information on the trends and
innovative opportunities in the market
Prepare remarks on the use of standardized contracts and
remarks on potential consequences of change
Remarks on preferred models of evaluation, remarks
on distribution/spread of criterias and the specification of
these
Remarks on which qualification demands are important
for the business sector, with an explanation on the
market consequences of these demands.
Session 1a-Procurers (assess strategic goals and
clarify needs) Theory, 3 hours
Market dialogue
Contract strategy
Qualification criteria
Techniques for description of needs / category knowledge
Strategic foundation
LATTERAL GROUP ASSIGNMENT
Evaluate each others contract strategy and qualification
criteria, approx. 1 hour per participant
Session 1b-Procurers and suppliers
DIALOGUE WITH THE MARKEDET
Receive remarks from the sector on the market
situation, trends and innovative opportunities.

Receive remarks on what the contract and

evaluation model should contain
Open Space Group assignment procurer-supplier

Session 2a-Procurers (clarify needs and prepare the

procurement) Theory, 3 hours
Market dialogue
Contract terms (incl. access to revisions)
Allocation criteria
LATTERAL GROUP ASSIGNMENT
Evaluate each others tenders, approx. 1 hour per tender
DIALOGUE WITH THE MARKET
Dialogue activities with the market
Secure the opportunities for effective coverage of needs
Secure broad participation in your competition
Session 2a-Suppliers (clarify needs and prepare the
procurement Theory, 3 hours
Part of the offer
Session 2b-Procurers and suppliers
DIALOGUE WITH THE MARKET
One-on-one meetings
Session 3-Procurers and suppliers (Contract
control) Theory, 3 hours
Supplier dialogue and market dialogue
Contract control
Control with social conditions and self-evaluation obligation
The control of demands and criterias
Learning within the organization
LATERAL GROUP ASSIGNMENT
Divided into groups to evaluate each others control of contracts
DIALOGUE WITH THE MARKET
Evaluate each others system for contract control
How to achieve optimal cooperation during the delivery
Cooperation on Best practice contract control for
the cleaning sector

Appendix 2: Balanced Procurement

- The findings in the maturing
measurements M= Maturing level,
N= 13

Before

After

How do you evaluate the time spent on supplier dialogue in the procurement
process?
It slows the process down
31 %
11 % 1
The process takes as long, but the time is better spent
31 %
22 % 2
on other things than before
It leads to less time spent on the process as a result of
38 %
67 % 3
fewer questions/misunderstandings/disagreements
Which statement best fits your view on dialogue in the procurement
We are a strong procurement unit with solid knowledge
14 %
of market trends and a good understand the needs of our
users
We know the market well enough, but our users must
7%
be allowed to voice their opinion to better define the
need in the competition
Its an important tool to gain more knowledge of the
79 %
opportunities that exists in the market and to better
define the actual needs of my organisation

process?
0%
1
22 %

78 %

Before

After

62%
38%

0%
1
100% 2

100 %
0%

67 %
33 %

1
2

71 %
29 %

11 %
89 %

1
2

8%
92 %

11 %
89 %

1
2

Will you invite the suppliers to meet and discuss:

Market communication in general
No
Yes
Next years procurement plans
No
Yes
An upcoming procurement
No
Yes
The Delivery through status meetings during the contract
No
Yes

Which allocation criterias do you think is best to use to evaluate offers

on cleaning services?
Market communication
Mainly Price
Mainly Quality
A balance between price and quality in combination
with e.g. environment and social criteria

Before

After

43 %
29 %
29 %

11 %
44 %
44 %

1
2
3

Do you think that the number of offers per competition on cleaning

services will increase with more use of dialogue techniques you have
learned through this course?
Before

No
Yes

After

75 %
25 %

1
2

When do you use the dialogue opportunities?

Before

After

Open up for remarks on the content and shape of the tender prior to publication
Never
14 %
0%
0
Seldom
21 %
0%
1
Some times
36 %
56 % 2
Often
29 %
44 % 3
Market dialogue prior to a competition: meet the suppliers one-at-the-time
Never
21 %
0%
0
Seldom
29 %
25 % 1
Some times
36 %
50 % 2
Often
14 %
25 % 3
Invite to showings in competitions where this is relevant
Never
14 %
0%
0
Seldom
0%
0%
1
Some times
21 %
11 % 2
Often
64 %
89 % 3
Negotiations in competitions where this is relevant
Never
14 %
22 % 0
Seldom
36 %
0%
1
Some times
29 %
44 % 2
Often
21 %
33 % 3
Direct dialogues with suppliers regarding the rationale of the letter of allocation
Never
36 %
11 % 0
Seldom
29 %
33 % 1
Some times
21 %
44 % 2
Often
14 %
11 % 3
Run-through of the offer after allocation, also with suppliers who lost
Never
43 %
22 % 0
Seldom
21 %
33 % 1
Some times
36 %
44 % 2
Often
0%
0%
3
Startup meeting with the supplier, where key users are invited
Never
7%
0%
0
Seldom
7%
22 % 1
Some times
29 %
56 % 2
Often
64 %
22 % 3
Status meetings/control of contract after signing
Never
0%
0%
0
Seldom
0%
0%
1
Some times
21 %
0% 2
Often
79 %
100% 3
Sharing experiences with the suppliers of today prior to new tender and
competition
Never
14 %
0%
0
Seldom
21 %
11 % 1
Some times
29 %
44 % 2
Often
36 %
44 % 3

Satisfactory response rate

4,00

Session 3
Session 2
Session 1

4,67
5,42
5,24
4,66
5,26
5

Our goal was a minimum 3,5 satisfactory rate on

on a scale from 1 to 6. We have exceeded this
Purchasers average,
Suppliers
goal for all sessions and for both target groups.
The response four months after the conclusion of the
seminars have been excellent, both from the EOs and
from the CAs.