Guidance on needs identification

This guideline primarily applies to the cities and communities that participated in the “Support Services for EU Smart Communities” project. However, the information provided below may also be useful for any external Contracting Authority as a guide for identifying its procurement needs.
 
Guidance on needs identification


1. Needs identification

The need identification phase is the first fundamental step in the public procurement process. It consists of defining, analysing and documenting the needs that must be satisfied through the acquisition of goods, services or works.

Within the Online Procurement Helpdesk for Smart Communities project and in alignment with the provided “Reference roadmap,” the Contracting Authority (CA) should identify and prioritise the key needs to be addressed to progress towards becoming a smart city. Alignment should involve translating the strategic goals defined in the roadmap into specific functional and technical requirements for the goods or services being procured.

2. Why are we buying?

The following steps can help CAs to better identify before launching a tender:

  • The definition of the need is a clear understanding of the issue that the procurement aims to resolve, ensuring that the need is both legitimate and aligned with the public organisation’s objectives.
  • Identify available resources within the organisation: this includes financial, human, and technical resources that can be leveraged to address the identified need. Recognising these assets helps in determining the scope and feasibility of the procurement.
  • Conducting an internal survey: this might include consulting relevant departments, reviewing existing processes, and assessing prior experiences.

3. Who is buying?

  • One public authority as the contractor: When a single public authority acts as a contractor, the process of identifying needs is more straightforward, as the needs to be met are defined internally and based on the specific objectives of the entity. This approach allows for direct management of priorities and resources, with greater control over the procurement process. However, individual purchasing can sometimes limit negotiating power compared to an aggregated demand.
  • Joint procurement: When a single public authority acts as a contractor, the process of identifying needs is more straightforward, as the needs to be met are defined internally and based on the specific objectives of the entity. This approach allows for direct management of priorities and resources, with greater control over the procurement process. However, individual purchasing can sometimes limit negotiating power compared to an aggregated demand.
    • Aggregated procurement:The aggregate procurement instruments provided for by the EU directive n.24/2014 include the Framework Agreement and the Dynamic Purchasing System, which are typically established by central purchasing bodies to facilitate the aggregation of purchases and promote economies of scale, and open for participation by other contracting authorities. Unlike joint procurement, these instruments do not involve collaboration in managing the entire procurement process. Instead, they enable contracting authorities to award contracts to economic operators participating in these aggregate mechanisms:.
      • Framework agreement: A framework agreement is an agreement between one or more contracting authorities and one or more economic operators, the purpose of which is to establish the terms governing contracts to be awarded during a given period, in particular concerning price and, where appropriate, the quantity envisaged. Contracting authorities may enter into specific contracts with suppliers selected for this framework agreement only when necessary, adapting them to their own needs.
      • Dynamic purchase system (DPS): A DPS is an instrument that is open for its entire duration to any economic operator that meets the selection criteria. It remains open throughout its duration to new economic operators who meet the selection criteria, ensuring continuous competition. With DPS, CA can access a dynamic and competitive market with new suppliers that can join at any time.

4. What are we buying?

4.1 The object of the procurement

During the definition of the need, the CA should determine the object of the procurement, which each CA will receive in their roadmap aimed at identifying the purchasable items, services, and technology for the implementation of an LDT in accordance with the specific maturity level of the city. To learn more about the object of procurement, consult Guideline on selection of objects of procurement and templates. At this stage, it may be important to explore the availability of the procurement object in the market, and in doing so, the CA can.

  • Plan market analysis: Market analysis, in the context of public procurement, is a process for gathering information that can help the CAs understand:
    • Market structure
    • Capacity of economic operators
    • Price trends
      Market analysis may be conducted through a desk-based approach (i.e. benchmark analysis to compare market prices and offers) to collect relevant market data. According to the EU Directive on public procurement, a contracting authority may also engage directly with economic operators as part of the market analysis by organising a preliminary market consultation to assess market readiness and identify potential suppliers or innovative approaches
  • Undertake a cost analysis which ensures that the financial implications of addressing the need are thoroughly evaluated. This step helps the CA balance cost-efficiency with value for money, ensuring that the proposed solutions are sustainable and justifiable

4.2 Techincal specifications

Once the object of the procurement, which can satisfy the CA’s needs, is determined, it is important to see which requirements the object of the contract should have. Specifically, the technical specifications are comprehensive requirements and technical details that outline the features, performance, and execution methods of the goods, services, or works covered by the contract. Suppliers must follow the standards and requirements outlined in the technical specifications set by the contracting authorities.

For more information on the structure of technical specifications within the procurement templates, please refer to Guideline on Technical Specifications interpretation and tailoring. If you want to incorporate sustainability into technical specifications and learn more about green public procurement (GPP) and social requirements, please see in detail Guideline on Information on procurement initiatives or strategy and criteria to be considered for sustainability and social objectives.

5. How are we buying? The type of procedure

Once the object and the technical specifications have been defined, selecting the type of public procurement procedure the CA intends to adopt is essential. However, sometimes the object of the contract cannot be fully defined—such as when research and development phases are required in collaboration with companies or when dialogue with companies is necessary to draft the technical specifications. In such cases, innovation procurement procedures (PCP or PPI) can be a solution. To know more about innovation procurement, see the details in Guideline on innovation procurement.

Besides innovation procurement, CAs can opt for:

  • Open Procedure: Any economic operator can submit a bid in an open procedure, ensuring complete accessibility and transparency. The process involves publishing a tender notice, receiving bids, and awarding the contract to the most compliant bidder.
  • Restricted Procedure: Here anyone may ask to participate in a restricted procedure, but only those who are pre-selected may submit a tender.
  • Negotiated Procedure: In this procedure, the CA negotiates with the selected candidates to adapt the offers to the specific needs of the contract. It involves pre-selection, negotiation, and submission of final offers. There is also the Negotiated Procedure Without Prior Publication, which can be used in exceptional circumstances: for reasons of extreme urgency arising from unforeseeable events when the time limits for the open or restricted procedures or competitive procedures with negotiation cannot be complied with; when the works, supplies or services can only be provided by a specific operator for technical or artistic reasons, or for the protection of exclusive rights; when the tender for an open or restricted procedure has been unsuccessful. To know more about negotiation processes, see the details in Guideline on effective procurement evaluation processes and negotiation.

6. How are we buying? Choosing award criteria

Award criteria are the criteria that form the basis on which a CA selects the best tender and awards a contract. These criteria must be established in advance by the CA based on the principle of proportionality, which provides for a prohibition on aggravating the procedure, taking into account the subject matter of the contract:

  • Lowest price: This method is simple and cost-effective, ideal for standardised contracts, but may overlook quality or sustainability considerations.
  • Most Economically Advantageous Tender (MEAT):The MEAT criterion evaluates bids based on both price and the quality outlined in the technical part of the offer. This approach promotes sustainability from environmental and social perspectives. For more details on incorporating sustainability into bids, refer to Guideline on Information on procurement initiatives or strategy and criteria to be considered for sustainability and social objectives. The MEAT criterion is typically used for procurement objectives that are not standardised.

Sources / Further guidance

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These services are provided as part of the Local Digital Twins toolbox procurement - Advancing initial stages for the transformation of Smart Communities - Lot 1 and Lot 2, as described in the Digital Europe programme, and funded by the European Union.

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