Application of the Competitive Dialogue in Practice

1
Application of the Competitive Dialogue in
Practice

• Glenn Fletcher
• Achilles Information Ltd

2
Issues to be covered

• When should competitive dialogue be used?
• What contracts has it been used for?
• What lessons have been learned so far?

3
When should competitive dialogue be used?

• A new procedure intended for contracts so complex
  that open and restricted procedures are
  impractical
• Effectively replaces the negotiated procedure
  with a call for competition (which had been used
  by UK for public private partnership contracts
  which required innovation and risk transfer)

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When should competitive dialogue be used?

• The procurement legislation emphasises the
  importance of non-discrimination and the
  transparency of procedures and decisions
• It therefore regards negotiation with suspicion
  and negotiated procedure is relatively rarely
  used (represents less than 10 of UK contracts
  advertised in the OJ?)

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When should competitive dialogue be used?

• Many large contracts require a degree of dialogue
  between contracting authority and supplier
• Authorities were therefore perhaps using
  negotiated procedures inappropriately or were
  negotiating (wrongly) within open or restricted
  procedures

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When should competitive dialogue be used?

• The new procedure was designed to allow a degree
  of negotiation in these complex contracts
• whilst retaining a tendering stage to ensure
  that the authoritys discretion was suitably
  limited
• to ensure non-discrimination
• The procedure is very similar to the best and
  final offer approach used for some time in UK
  and elsewhere

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When should competitive dialogue be used?

• Where the contracting authority is not able
  objectively to define the technical means to meet
  its objective (e.g. complex information systems)
• Or is not able objectively to specify the
  legal/financial make up of the project (e.g.
  design build and operate projects)
• And where the authority considers that open or
  restricted procedures would not allow the award
  of the contract

8
What contracts has it been used for?

• Major information systems contracts (databases,
  back office computer systems, network services)
• Public private partnership contracts (where
  supplier innovation is required and risk is
  transferred to the supplier) (prisons, hospitals,
  schools, urban redevelopment schemes)

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What contracts has it been used for statistics
from January 2008 search of OJ database

• Competitive Dialogue contract notices amounted to
  1717 of 294849 total contract notices published
  in the period (2006-2007)
• So far no Competitive Dialogue contract award
  notices have been published
• Contract notice statistics for selected countries
  (2006-2007)
• France 670
• UK 658
• Germany 61
• Italy 3
• Ireland 44
• Denmark 21
• Netherlands 33

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What contracts has it been used for sample
contracts

• Admission tests for the selection of students for
  undergraduate medical programmes.
• Urban regeneration works
• Medical information systems
• Environmental-impact consultancy services
• Insurance services
• Fleet tankers for British Royal Navy
• Design and construction of highway

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What lessons have been learned so far?

• The procedure is unfamiliar to contracting
  authorities and suppliers
• Thus care must be taken to ensure all understand
  the process
• There are some aspects of the process that are
  unclear in practice
• European Commission guidance is only in draft at
  present
• No relevant European court cases

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What lessons have been learned so far?

• Procurement using the procedure takes
  considerable time (1-2 years is not unusual)
• This partly reflects the nature of the (very
  large) projects involved
• Costs of preparing tenders can be very high
• Some suppliers consider costs are greater using
  this procedure than where the negotiated
  procedure was used

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What lessons have been learned so far?

• The process is very time and resource intensive
  for contracting authorities
• Often the necessary technical resource is not
  available within the authority
• Leading to cost/delays to acquire necessary
  consultancy
• Meticulous planning at the start of the
  procurement process is essential to ensure
  success

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What lessons have been learned so far?

• The process is best suited for large, high risk
  projects
• Where the resource cost to the authority and
  suppliers is not disproportionate to the size of
  the benefits/profits to the parties
• It is not an easy option to compensate for
  inadequate thought by authorities about what they
  really need

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Conclusions

• Competitive Dialogue has aroused great interest
  amongst contracting authorities
• There is little experience so far with this new
  procedure but it is often used for projects in
  substitution for the negotiated procedure with a
  call for competition
• Authorities have welcomed the fact that use of
  the procedure is relatively easy to justify
• Careful planning and the deployment of adequate
  resources is essential to the successful
  operation of the procedure