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Projects - Competitive Dialogue

The Competitive Dialogue Procedure was introduced in Scotland by the Public Contract (Scotland) Regulations 2006. It governs the award of public contracts in relation to the supply of goods, works and services.

The intention of the new procedure was to bring fairness to procurement where dealing with complex contracts, including Public Private Partnerships and PFIs. It is intended to ensure that there is equal treatment to those submitting tenders, non-discrimination and transparency.

In addition to competitive dialogue, there are 3 other procurement options available to contracting authorities:

  • the "Negotiated Procedure": which has been used to date for complex contracts.  However, the European Commission expects and is encouraging the use of competitive dialogue rather than the negotiated procedure.
  • the "Open Procedure": where any interested party is permitted to tender and those that respond to the notice will receive full information in relation to the proposed contract.
  • the "Restricted Procedure": where tenders are selected from those who respond to the OJEU Notice.  Only those that are selected are invited to submit a tender and negotiation is not allowed.

The competitive dialogue process is now to be used in cases of particularly complex contracts (such as PPP/PFI).

The Competitive Dialogue process is complex. There are 3 main phases, each containing various different stages.

Phase 1: Pre-Dialogue

  • Stage 1: Planning and initial preparation (pre-OJEU notice)
  • Stage 2: OJEU contract notice to short-listing of bidders via PQQ
  • Stage 3: Selection of bidders and preparation for the dialogue stage (ITPD - invitation to participate in dialogue)

Phase 2: Dialogue

  • Stage 4: The dialogue. This may include the provision of various submissions by bidders, and allows down sizing

Phase 3: Post-Dialogue

  • Stage 5: Submission of final tenders (ITSFB - invitation to submit final bids) and tender evaluation
  • Stage 6: Bid clarification. Tenders may only be "clarified", "specified" and "fine tuned"
  • Stage 7: Preferred bidder to financial close.

Potential and perceived advantages of competitive dialogue (compared to negotiated procedure):

  • less scope for significant issues to arise at preferred bidder stage
  • the authority can ensure a better understanding of its requirements
  • increased bidder understanding of requirements
  • increased openness between public and private sector
  • promotes competitive tension.

Potential and perceived disadvantages of competitive dialogue:

  • increased costs for bidders
  • increased time to preferred bidder stage
  • concerns over sharing of bidders ideas and confidential information with other participants
  • the process remains uncertain.

HM Treasury has now issued guidance on using competitive dialogue, aimed partly at increasing consistency of approach to CD.

Our Projects Group has advised on the Competitive Dialogue Procedure since its inception, advising both the public sector and to private sector bidders.