An exception, rather than the rule

23 January 2012
Following Francis Maude's statement to public sector buyers on a 'presumption against competitive dialogue', you could be forgiven for being a little confused. Competitive dialogue has always been an exception route, to be used only where the open and restricted procedures cannot generate the required outcome or where the authority does not know the detail of what it wants to buy (and how) in advance. Nothing new in the most recent statement, then? Also, current policy (at least in central government) is that the open procedure should be used wherever possible and relationships should be formed by soft market testing and exploring opportunities with suppliers before going to market. Again, this is consistent with the minister's latest statement. The legal elephant in the room is that the open and restricted procedures do not allow negotiation on fundamental aspects of the contract, particularly in relation to price. So, buyers need to go to market with fully defined specifications and, essentially, ask bidders to bid a price. While some limited ‘negotiation’ of terms may be permitted, the EU case law tells us this should be on the basis of bidders being able to propose wholesale amendments that are either accepted or rejected by the contracting authority. This is clearly not going to be satisfactory for complex contracts such as those in the ICT or waste sectors, where innovation in bidder solutions is necessary and desirable. The other myth here is that every competitive dialogue has to be protracted. Using innovation in the procurement, such as limiting dialogue to key areas and having strict timetables to conclude the bidding, keeps costs down all round and helps to deliver the innovative solutions so desperately needed. The risk is that by shoe horning complex procurements into an open or restricted procedure, buyers will be legally challenged for breach of the procurement rules. Spotting negotiated positions in contracts is easy - dissatisfied losing bidders can simply make a freedom of information act request for the completed document and then compare it against the one sent out with the invitation to tender. This is very difficult to defend and it will be interesting to see what the view of the High Court (and the European Commission) is on this new policy. The government is clearly pushing procurement up the agenda, which is good news for professional purchasers and the taxpayer, where innovation results in savings. But in the current climate of unprecedented levels of procurement challenges, buyers still need to give proper consideration to the correct procurement route because the open procedure is not a one-size-fits-all solution. It is perhaps too early to consign competitive dialogue to the dustbin. ☛ David Hansom is a partner and head of the specialist procurement team at Veale Wasbrough Vizards.
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