There is a common perception among the respondents that competitive dialogue is more resource-intensive and expensive compared to alternative procurement procedures for both contracting authorities and bidders. As much as 30% of respondents admit that they are unable to provide the additional resources required on the public side. This often translates into an increased reliance on external advisors.
Some respondents point out that it proves useful in their experience to run focused "specialists only" sessions before finalizing the relevant aspects of the project proposal at an all-parties session.
The increase in costs is often a result of extensive dialogue meetings25. In order to drive down the overall procurement costs, some of contracting authorities try to keep the number of participants at a manageable level (e.g. reducing the number of bidders invited to conduct a dialogue, as well as using the option to down scale discussed before).
Box 1: Sharing of bid costs In order to mitigate the negative cost impact for the bidders some contracting authorities agree to compensate losing bidders for some of their bid costs. Such practice seems to be relatively rare and in many cases is a response to the deteriorated financing conditions which have led to difficulties in securing competition. It obviously has the effect of increasing the cost for the authority. The payment of compensation is normally designed to keep as many bidders as possible (particularly the smaller ones) in the process, up to the final offer stage. To discourage malpractice, such payment can be made dependent on achieving financial close under a project or on the absence of challenges of the procurement procedure. The budget for compensation can be drawn either from available public funds or be charged to the winning bidder. An overview of some reimbursement practices currently utilised in Europe is available in Annex 4. |
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25 Some of the respondents noted the risk of having too many points on the discussion agenda. This is often a result of contracting authorities failing to do their "homework" prior to the start of procurement process and / or lack of sufficient experience and confidence on their part. Inadequate preparation by contracting authorities is by itself a threat to effective procurement process and is likely to result in increased procurement time and costs. Useful references on the key issues and procedures involved in the procurement of PPPs can be found in A Guide to Guidance. Sourcebook for PPPs, European PPP Expertise Centre - EPEC.