Summary and implications
As the government publishes its intention to re-examine the use of competitive dialogue in public procurements, is it time to take greater control and work better with what we’ve got?
- Competitive dialogue is over-used – there are times when alternative procurement routes may be more appropriate;
- Dialogue processes can be efficient and effective - when well run;
- The Foreign and Commonwealth Office’s recently signed contract for FM services is an example of good practice.
Choosing the right route
With spending cuts affecting every area of the public sector, a refocusing on how we undertake public procurement is timely. It’s not necessarily the rules that are wrong - rather the way in which they have been interpreted, in practice and by guidance.
In many sectors, competitive dialogue is now selected as a matter of course, even where the simpler and quicker restricted procedure or even the negotiated procedure may be more appropriate. The time has come for a more pragmatic and realistic approach to public sector procurements.
Is it really necessary for a relatively bog standard contract for an IT managed service or a contract to build a new school to hold extensive dialogue with bidders on all aspects of the design, the price and the contract? Perhaps not – and maybe the restricted procedure is more suitable.
The public sector has shied away from using the negotiated procedure in recent years. Whilst it must only be used in exceptional circumstances, this does not mean that it can never be used at all. Where there are particular complexities, the negotiated procedure can and should be used. An audit trail of the justification (for any procurement route) is an absolute.
An effective dialogue
Where competitive dialogue is appropriate (and it will be in many circumstances), a well run dialogue pays dividends for both the procuring public sector body and the bidders.
Our top tips are:
- Plan the dialogue carefully, allowing sufficient time for face to face meetings and for ideas and thoughts to consolidate;
- Decide on the right number of bidders to go through at each stage – dialogue on detailed solutions with more than three bidders is a challenge for any public body;
- Avoid dialoguing absolutely every element of the contract, focussing instead on the areas where bidders’ input is required or where innovation is sought;
- Build in regular “pit stops” to check on progress and outcomes and to ensure that the dialogue is progressing as planned;
- Have a realistic timetable and stick to it – authorities need to be braver about deciding when to close dialogue and move to final tenders, and the private sector needs to support this
Decisions, decisions … choosing the right procurement route
- Open and restricted procedures – for relatively simple procurements where requirements can be specified and where prior overall pricing is possible.
- Competitive dialogue procedure – for complex contracts where the open or restricted procedures cannot be used and where there are complexities in the legal or financial structure
- Negotiated procedure – to be used in exceptional circumstances only.
Foreign and Commonwealth Office - outsourcing of facilities management services
Nabarro advised the FCO on its outsourcing of FM services in its extensive estate (including High Commissions and UK Embassies) in the Asia Pacific region. Denmark-based company, ISS Global, was appointed following a focussed and intensive competitive dialogue involving three bidders.
The competitive dialogue centred around key areas (including the pricing schedule and performance regime) with little or no dialogue on areas where discussion was not needed (including for example the specification). Bidders were required to make interim submissions to the FCO for detailed consideration in advance of dialogue workshops. The dialogue focussed on the FCO putting its position to bidders and scrutinising their proposals.
The FCO’s expectations were high and the bidders responded positively, recognising that an efficient dialogue will save on bid costs and achieve clearer outcomes. The contract was signed on 1 November 2010, just over 12 months after publication of the OJEU notice.