Competitive Dialogue – Friend or Foe?

If you want to improve your chances of scoring well through this process it is important to improve the performance of your team and increase their standing within the eyes of the awarding contractor.

The new Competitive Dialogue (CD) procedure was introduced as part of the Public Contracts Regulations in the UK from the end of January 2006. However CD is not appropriate for all forms of procurement in the public sector. A contracting authority is only entitled to invoke the procedure where it “considers that the use of the open or restricted procedure will not allow the award of a contract”. Or, put another way when the authority is not able to objectively define one or more of the following definitively – the legal, financial or technical solutions that would best satisfy their needs or objectives – in other words the more complex projects! The net result of this for both parties is that the solutions will evolve and develop as a result of the process and may change quite radically during it.

Any authority engaging in the process must be extremely vigilant to make sure that all potential bidders are treated fairly and equally, for the sake of the process itself and to make sure no challenges are made after the final award – this would be costly for all concerned, reduce contractors faith in the authority and significantly delay the project itself.

Under the regulations a minimum of three bidders must be invited to dialogue after the PQQ stage. During the Invitation to Dialogue ask the awarding authority must include details of the criteria by which the bids will be evaluated against and the associated weightings.

It is envisaged that there will be at least two stages to the CD process. The first will focus on the outline solutions from each potential bidder and should allow the contracting authority to mark the potential bidders against the stated criteria and then rationalize the number of bidders down ahead of the second stage. A short list of bidders will then generally be invited to submit detailed priced technical solutions. Further dialogue sessions are likely to follow to explore the solutions and resolve any outstanding issues. There must be sufficient bidders involved in this stage of the process to allow for genuine competition – the minimum number for this is generally regarded as three.

Dialogue can continue until the authority has identified the solution(s) which meet its needs, including key contractual terms. Bids must always be assessed by the evaluation criteria previously disclosed to the bidders – and must be selected on the basis of the Most Economically Advantageous Tender (MEAT).

In recent years there has been a significant increase in the number of legal challenges by aggrieved bidders. One reason for this is that due to the credit crunch there are fewer alternative opportunities around for unsuccessful bidders to move to, and also bidders are generally more aware of their rights.

Once the final tender is selected (under CD) there can be no post tender negotiation. The issue with the above for the awarding authority is that there is a danger of closing the dialogue too early, before all eventualities have been explored. On the flip side, if the dialogue stage lasts too long it will potentially have significant cost impact of the contractors involved and they may pull out of the scheme before the process is completed, thus making the whole thing either null and void, or at best seriously undermined.

From the awarding authorities perspective CD offers them the opportunity to enter into meaningful dialogue with the private sector. Through the flexibility of the process they can then draw upon significant amounts of expertise and knowledge. To be successful the CD process does demand time and resource from both sides, but provided that when both parties engage they are fully aware of the commitments required then there is every reason the process will be successful – to the maximum benefit of both sides.

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