© OECD A joint initiative of the OECD and the European Union, principally financed by the EU Application of the Competitive Dialogue in Practice Glenn Fletcher Achilles Information Ltd

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU Issues to be covered l When should competitive dialogue be used? l What contracts has it been used for? l What lessons have been learned so far?

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU When should competitive dialogue be used? l A new procedure intended for contracts so complex that open and restricted procedures are impractical l 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)

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU When should competitive dialogue be used? l The procurement legislation emphasises the importance of non- discrimination and the transparency of procedures and decisions l It therefore regards negotiation with suspicion and negotiated procedure is relatively rarely used (represents less than 10% of UK contracts advertised in the OJ?)

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU When should competitive dialogue be used? l Many large contracts require a degree of dialogue between contracting authority and supplier l Authorities were therefore perhaps using negotiated procedures inappropriately or were negotiating (wrongly) within open or restricted procedures

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU When should competitive dialogue be used? l The new procedure was designed to allow a degree of negotiation in these complex contracts… l …whilst retaining a tendering stage to ensure that the authority’s discretion was suitably limited… l …to ensure non-discrimination l The procedure is very similar to the ‘best and final offer approach’ used for some time in UK and elsewhere

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU When should competitive dialogue be used? l Where the contracting authority is not able objectively to define the technical means to meet its objective (e.g. complex information systems) l Or is not able objectively to specify the legal/financial make up of the project (e.g. design build and operate projects) l And where the authority considers that open or restricted procedures would not allow the award of the contract

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU What contracts has it been used for? l Major information systems contracts (databases, back office computer systems, network services) l Public private partnership contracts (where supplier innovation is required and risk is transferred to the supplier) (prisons, hospitals, schools, urban redevelopment schemes)

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU What contracts has it been used for – statistics from January 2008 search of OJ database l Competitive Dialogue contract notices amounted to 1717 of total contract notices published in the period ( ) l So far no Competitive Dialogue contract award notices have been published l Contract notice statistics for selected countries ( ) France 670 UK 658 Germany 61 Italy 3 Ireland 44 Denmark 21 Netherlands 33

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU What contracts has it been used for – sample contracts l Admission tests for the selection of students for undergraduate medical programmes. l Urban regeneration works l Medical information systems l Environmental-impact consultancy services l Insurance services l Fleet tankers for British Royal Navy l Design and construction of highway

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU What lessons have been learned so far? l The procedure is unfamiliar to contracting authorities and suppliers Thus care must be taken to ensure all understand the process l 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

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU What lessons have been learned so far? l Procurement using the procedure takes considerable time (1-2 years is not unusual) This partly reflects the nature of the (very large) projects involved l Costs of preparing tenders can be very high Some suppliers consider costs are greater using this procedure than where the negotiated procedure was used

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU What lessons have been learned so far? l The process is very time and resource intensive for contracting authorities l Often the necessary technical resource is not available within the authority Leading to cost/delays to acquire necessary consultancy l Meticulous planning at the start of the procurement process is essential to ensure success

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU What lessons have been learned so far? l The process is best suited for large, high risk projects l Where the resource cost to the authority and suppliers is not disproportionate to the size of the benefits/profits to the parties l It is not an ‘easy option’ to compensate for inadequate thought by authorities about what they really need

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU Conclusions l Competitive Dialogue has aroused great interest amongst contracting authorities l 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 l Authorities have welcomed the fact that use of the procedure is relatively easy to justify l Careful planning and the deployment of adequate resources is essential to the successful operation of the procedure