OGC/HMT Guidance on Competitive Dialogue

HM Treasury, OGC


1.1 In March 2004 the European Commission published Directive 2004/18/EC. Amongst other things, this introduced the new Competitive Dialogue procurement procedure. It was anticipated at the time that it would largely replace the negotiated procedure except for the most exceptional projects.

1.2 The Office of Government Commerce (OGC) published initial guidance 1 on the Competitive Dialogue procedure when the new Regulations 2 came into force on 31 January 2006 and issued a later Procurement Policy Note 3. There are links to these and other guidance notes in Appendix B (while some tend to relate to specific sectors, some of them also have more general applicability).

1.3 As with all new procedures there has been some uncertainty about how to undertake Competitive Dialogue in practice. A substant ial number of these procurements have got underway over the last two years, covering a broad scope of projects and using a wide range of approaches. This variety in methods is understandable, considering the relatively short time since the procedure was introduced and the limited range of experience and guidance that has been available.

1.4 In the interests of improving both consis tency and efficiency in public procurement, OGC and the Treasury, working with advisors PricewaterhouseCoopers, have developed this guidance. It is based on discussions with a range of Contracting Authorities, practitioners, bidders and advisors with direct experience in undertaking some of these procurements.

1.5 It provides a practical insight on how to use the new procedure to help Contracting Authorities, and others, to undertake them. It is not a rulebook or a detailed instruction manual, rather it contains advice and suggested approaches based on the experiences of people who have used, or are currently using, the procedure. It is intended to complement, rather than to replace, existing guidance on Competitive Dialogue.

(1 Introduction)

6.1 The Competitive Dialogue procedure should now replace the Negotiated procedure as the main procedure for complex public procurements where open and restricted procedures are deemed unsuitable.

6.2 Although this new procedure is based on established procurement principles - including transparency, openness, and non-discrimination - it does impose a significant resource burden and discipline on the Contracting Authority running the process, and can mean that bid costs are higher for both the Contracting Authority and unsuccessful bidders than previously.

6.3 Generally, Competitive Dialogue requires:

  • Staying within scope; working within the parameters published at the outset, and during the course of the procurement process until the end;
  • Extensive planning; the Contracting Authority must plan in advance and in detail how the entire process will be run. Time invested early on in the process can reduce the overall time and costs;
  • Competitive tension to be in place during all substantive negotiations;
  • Substantial resources; additional costs and resources may be required for the Contracting Authority to negotiate with more than one bidder, and for unsuccessful bidders who have to develop their bids further before knowing if they will be successful;
  • Careful consideration of the legal boundaries; although there is not yet any specific legal interpretation of what is or is not permitted, there is only very limited room for manoeuvre after the dialogue is over and final bids have been requested;
  • Solutions to be well developed before close of dialogue; the Contracting Authority and bidders must be very clear before dialogue is closed about whether a bid is likely to be acceptable or not.

(6 Summary)