Competitive dialogue is one form of interactive tendering to drive a solution that best meets the needs of the purchaser and the respondent. It is a collaborative process which facilitates open interaction and dialogue with respondents prior to the submission of proposals.  

It allows for proposed solutions to evolve and different technical approaches to be considered, to achieve a more tailored and innovative solution, including co-design and de-risking proposed responses. This compares with a conventional procurement process, such as a Request for Tender where there is less active engagement with industry in solution definition, and opportunities for innovation and continuous business improvement are unable to be optimised. 

For example, technical and pricing assumptions associated with proposed responses are able to be tested in competitive dialogue, allowing shortlisted respondents to de-risk their proposed responses whilst allowing both the purchaser and respondents to better define the client requirements in an environment of co-design whilst maintaining competition and remaining within probity guidelines.  

Conducted well, competitive dialogue significantly improves the chances of: 

  • Achieving best value for money 
  • Designing innovative technical solutions 
  • Reducing technical and pricing risk 
  • More effectively meeting the needs of both parties 

Key benefits of competitive dialogue include: 

Providing respondents with the opportunity to explore and reduce areas of uncertainty and risk associated with the client's requirements (that is, technical, schedule, cost or commercial) 

Providing participating respondents with the opportunity to update and improve the potential value for money of their responses following feedback 

Allowing the purchaser to understand proposed responses better, and to seek clarification and additional detail without the constraints that apply in a more traditional form of evaluation 

Maintaining strong competition while obtaining the flexibility described above   

When should competitive dialogue be employed? 

The competitive dialogue process is flexible and suitable where there is a need for the purchaser to be able to discuss aspects of the proposed solution with prospective respondents. Its use is usually limited to complex procurement processes which will result in a complex contract. This is particularly the case for employing competitive dialogue where the purchaser: 

  • Is not sure about current technologies and industry advances in its area of interest 
  • Cannot at the start of the procurement process define fully and clearly the technical, financial, legal or other requirements which will satisfy their needs or objectives  
  • Is seeking innovative approaches to meeting its requirements, including alternative approaches to its existing approach