Application of the Competitive Dialogue in Practice

1. Application of the Competitive Dialogue in Practice Glenn Fletcher Achilles Information Ltd “The New Public Procurement Procedures and Instruments” Ankara, Turkey – 5-6 February 2008

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)

4. 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?)

5. 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

6. 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 authority’s 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

7. 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)

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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