Value creation or value loss: Negotiation in public procurement in a Danish context

Abstract: This study explores and maps negotiations between contracting authorities (CA) and private entities in the construction sector in Danish public procurement. Based on the document analysis of 993 contract notices and 332 Instructions to Tenderers (ITT’s) and 33 observations of negotiation meetings, the study shows that the negotiations are mostly distributive. The negotiations are characterized by being time restricted, formal, with many people in the room, a low level of exchange of information with argumentative and closed questions and not focused on relations. In a few cases the negotiations are partly integrative with focus on open questions, active listening and focus on needs and interests. The distributive orientation could be explained by the pre-meeting documents setting the scene for the negotiations in a written language tending to be legalese, instructive and/or argumentative. The study will discuss whether the procedures with physical meetings lead to value creation or value loss for both parties to ensure the parties subsequent contractual relationship. The study explores the possibility for increasing value creation in the negotiations by promoting awareness on methods and ideas for making the negotiations more integrative within the framework of EU Public Procurement law as well as adressing the limitiations of the legal framework.

Keywords: Negotiation, negotiation styles, business negotiation, distributive negotiation, integrative negotiation, value creation, public procurement, construction