1. Procurement of major contracts - A half day conference -
Professor Dr. Martin Burgi
Research Institute for Public Procurement Law
Law Faculty
Competitive Dialogue and the
Procurement of major contracts
- A half day conference -
The Competitive Dialogue in Germany
London, 27 October 2011
The Procurement Lawyer`s Association (PLA)

2. I. Introduction
II. The Competitive dialogue in Practice
III. The Regulatory Framework
IV. Scope
V. Conditions for the Applicability
VI. Examples of Application
VII. Correlation with the other Procedures
VIII. Procedure and Operation
IX. Key Issues
X. Key Issues in Detail
XI. Conclusion
XII. Approaches to the Commission`s Green Paper
Agenda

3. I. Introduction
Prior to 2004 in Germany: negotiated procedure
Introduction with the legislative package offering means
of discussion
Germany:
Integration as part of the Act to Accelerate the
Realisation of Public Private Partnership of
designed as a flexible procedure for the realisation of
PPP

4. II. The Competitive Dialogue in Practice
Germany as a regular user of the competitive
dialogue (in contrast to other Member States)
But still: relatively rare use in practice and poor case
law
Of all contract notices published in the OJ ( ):
59,396
11,440
2,227
Competitive dialogueCompetitive dialogue
Negotiated procedureNegotiated procedure
Open procedureOpen procedure
Restricted procedureRestricted procedure

5. § III. Regulatory Framework
Art. 29 and recital 31 of Directive 2004/18/EC
§§ 101 para. IV Act against Restraints on Competition
and §§ 3 para. VII VOL/A-EC, 3a para. IV VOB/A, largely
copying the wording of the Directive`s articles
Guidance provided (marginally) by legislation and
jurisdiction, but strategic assistance is given by the
explanatory note of the European Commission (2005),
legal experts and e.g. a PPP Task Force installed in
North-Rhine-Westphalia

6. IV. Scope
Established only for contracts above the thresholds
Seeking for the most economically advantageous tender, not the tender with the best price
Applicability for public works concessions, not available for public service concessions
Not established for contracts below the thresholds
Not established for contracts in the Utilities sector

7. V. Conditions for the Applicability
„Particularly complex contract“
Technical complexity or/and
Legal or financial complexity
The purchasing body is either objectively unable to
define the technical means capable of satisfying the
purchaser`s needs and objectives or incapable of
specifying the legal and financial conditions of a project
Decision on a by-case basis

8. VI. Examples of Application
Public Private Partnerships (PPP`s)
Generally suitable procedure for PPP contracts
Reason: the rights, obligations, costs, risks of the partners and the services cannot be sufficiently specified beforehand
Co-operation in developing a suitable and needs-oriented solution
From the beginning linked with PPP within the legislative context
Other Examples (relatively rare)
Complex urban development projects
Complex construction projects (reconstruction of the State of Brandenburg Parliament; soccer stadium in Mainz)

9. VII. Correlation with other Procedures
1. The Hierarchy of the procedures
Starting point: Competitive Dialogue as a procedure sui generis
§ 101 para 7 GWB, §§ 3 para 1
VOL/A-EC, 3a para 2 VOB/A
Open procedure
Restricted Procedure
Negotiated Procedure and
Competitive Dialogue
Art. 28 Directive
2004/18/EC
Open and restricted
procedure
Negotiated Procedure
and Competitive Dialogue

10. 2. The correlation with the negotiated procedure
Problem: The scope of the competitive dialogue and the negotiated procedure typically overlap
The competitive dialogue does not enjoy priority over
the negotiated procedure
Negotiated procedure is - paradoxically - more
flexible
Negotiated procedure longer established in Germany
More frequent use of the negotiated procedure

11. 3. The main differences Competitive Dialogue Negotiated Procedure
Particularly useful in order to
find suitable solutions
Specification impossible:
descriptive document
Comprehensive discussions with
the tenderer
No further discussions after the
submission of bids
Negotiated Procedure
Particularly useful to discuss
solutions that are already
available
Specification of the contract, mostly
in terms of functional requirements
Comprehensive discussions with the
tenderer
Discussions after the submission of
first solutions/bids
But: No further discussions after the
„final call“

12. VIII. Procedure and Operation
IV. Award Stage
III. Dialogue
 Official end of the
procedure
 Call for final
offers containing „all
elements“ required for the performance of the
contract
No modified or adjusted specifications
 Core of the
procedure
 „All aspects“ may
be discussed
 No solutions to be
submitted before the
dialogues
 Successive reduction
due to reasons of
procedural efficiency
 ensure equality
of treatment and
confidentiality
II. Selection
I. Publication
 Open the dialogue with
the candidates selected
 Free to limit the
number of candidates
to be invited to conduct
a dialogue as long as
genuine competition is
ensured
 Contract notice published in the OJ
Additional publication in
daily newspapers, expert or official journals, internet portals
 Roughly draft the
procedure, time limits,
selection structure

13. IX. Key Issues Competitive Dialogue Procedure Confidentiality
Selection and Reduction of candidates
Prices negotiable?
Dialogue with only the best bidder?
Degree of completeness of tenders and changes
Time limits

14. Not be revealed to third parties (§§ 3 para. 7 lit. b) VOL/A-
X. Key Issues in detail
1. Confidentiality
Inventory solutions or “confidential” information shall not be revealed to other participants without the consent of the bidder (Art. 29 para. 3)
Not be revealed to third parties (§§ 3 para. 7 lit. b) VOL/A-
EC, 3a para. 4 No. 3 VOB/A) either
Dialogues taking place “behind closed doors”
Idea of including a “Mediator”
Can the contracting authority use the agreement of the bidder as an “entrance ticket”?
Problem: which information is “confidential”?
Appropriate compensation for agreement to use confidential ideas (Art. 29 para. 8; § 3 para. 7 lit. f) VOL/A-EC; § 3a para. 7 VOB/A) 14

15. 2. Selection and phased elimination
Contracting authority enters into the dialogue with the
selected candidates
Selection criteria not fully identical with suitability criteria
Reduction of the candidates for reasons of procedural
efficiency
Mostly reduction to 3-5 tenderers
Phased elimination of the selected during the discussions
(Art. 29 para. 4) possible under the condition that genuine
competition takes place 15

16. 3. Are the prices negotiable?
On the one hand: the competitive dialogue is a procedure
designed to develop solutions; if prices were fully negotiable the complete offers would be discussed
On the other hand: Prices need to be negotiable as “all
aspects of the contract” can be discussed (Art. 29 para. 3) and bidders may be asked to hand in final offers on the basis of the solutions presented and specified during the dialogue (Art. 29 para. 6)
At least: all essential aspects regarding the calculation need to be negotiable 16

17. 4. Dialogue with the best bidder?
Art. 29 para. 4: Contracting authorities may provide for the
procedure to take place in successive stages in order to reduce the number of solutions to be discussed
Art. 44 para. 4 S. 2: In the final stage, the number arrived at shall make for genuine competition insofar as there are enough solutions or suitable candidates
No dialogue with only the best bidder unless there is only
one solution in the competition
“Parallel strategy” enjoying priority over the “linear strategy” 17

18. 5. Degree of completeness and changes
Comprehensive discussions with possibility for changes before the submission of final tenders
Require „all elements necessary for the performance of the
contract“ (Art. 29 para. 6 S. 2)
The final tenders need to be complete
Art. 29 paras. 6, 7: tenders should not be modified after their
submission
Only clarifications, specifications and additional information that are not likely to distort competition or have discriminatory effect
No discussions allowed after the submission of final tenders 18

19. No need to publicize adjusted specifications after the
6. Time limits
Art. 29 para. 5, 6: The contracting authority continues the dialogue until it can identify the solution or solutions, which are capable of meeting its needs and aks the bidders to submit their final tenders on the basis of the dialogues.
No need to publicize adjusted specifications after the
dialogue phase has been declared concluded
No need to balance out or to outweigh differences between the tenders or the differences regarding the capabilities and abilities of the tenders to submit suitable bids on time
Discretion of the purchasing body strengthened 19

20. XI. Conclusion
The Competitive Dialogue in Germany
Less flexible than
originally designed
Until now:
Comparatively rare
use of the procedure
while frequent use
of the well-established
negotiated procedure
In future:
more clarity and
legal certainty will
probably lead to its
establishment and to
more innovation
through public
procurement

21. XII. Approaches to the Commission`s Green Paper
1. The Commission`s Green Paper asks:
Do you think that the procedures and tools provided by the Directive to address specific needs and to facilitate private participation in public investment through public-private partnerships (e.g. dynamic purchasing system, competitive dialogue, electronic auctions, design contests) should be maintained in their current form, modified (if so, how) or abolished?
2. Synthesis of replies concludes:
that the Green Paper is generally welcomed and that stakeholders put a particularly strong emphasis on the need to simplify procedures and make them more flexible. A very strong majority - with the exception of citizens and some SME representatives - supports the idea of allowing a greater use of the negotiated procedure.
3. Report of the German Bar Association suggests:
to establish a second-stage procedure for the open and restricted procedure, in which the contracting authority would first call for indicative tenders and after discussions for definitive tenders. The Association further suggests to adopt Art. 29 para. 3 subparas. 2, 3 of Directive 2004/18/EC on the condition that genuine competition is ensured