Why tender when not required? On purchasing practices in the Norwegian petroleum industry

Abstract

ABSTRACTUntil recently, tendering has been the required form of purchasing in the Norwegian petroleum industry. Due to increased competition, this is no longer a requirement. Still, tendering is a widespread practice within the industry, which today faces demands to rationalize its operations, including purchasing. This paper examines why and how tendering may be used as a purchasing strategy in the Norwegian petroleum industry, even when it is no longer required. A qualitative survey of 11 companies in the Norwegian petroleum industry reveals the current status of tendering as it is perceived by these companies. The analysed topics include the reasons for tendering, transparency issues, the role of negotiations when tendering and managing tendering are a transaction form, the features of the industry, and competence issues, and how tendering procedures and negotiations are intertwined in the contracting of a purchase. Tendering is revealed not to be limited to strategic concerns regarding whether to tender, and it includes hybrid solutions such as negotiation.