3.2 It is widely recognised that projects, regardless of their procurement route, are frequently placed under pressure to enter into a formal procurement process too early, often with negative consequences. The ERG notes in 'A Formula for Success' "The competitive phase in the procurement process is often started too early, principally in an effort to make, or to be seen to make, progress. But this is a false economy. Using the competitive process to resolve issues, which could have been dealt with before the start, is likely to be more difficult and more costly."1
3.3 Feedback received from our surveys and the roundtable sessions was very clear with regards to this stage of the process - pre-procurement is the most challenging and most influential stage of a Competitive Dialogue procurement. The findings also indicate it is often the most neglected and poorly executed part of the process.
3.4 The review has indicated that increased, and more focused, early engagement with suppliers would significantly improve the ability of contracting authorities to deliver an efficient and effective process and improve both value for money and the quality of outcomes delivered by the project.
3.5 The roundtable events produced a strong consensus view from both public and private sector contributors that early engagement with suppliers is essential. Public sector procurement specialists agreed they remain overly cautious over pre-procurement market testing.
3.6 One of the private sector's main complaints about Competitive Dialogue is the tendency for the public sector to use the Dialogue phase as an opportunity to take advantage of 'free consultancy' from the market - allowing suppliers to come forward with suggestions during Dialogue and then using this information to tailor, and often redefine, their requirements and outcomes. Doing this at the Dialogue stage it too late.
3.7 While there was evidence of pre-procurement 'soft market testing' to attract bidders to a project in advance of issuing an OJEU notice there was little evidence of engaging with suppliers to help identify achievable outcomes or to define the scope. Bidders have made it clear they are happy to engage in soft market testing processes as long as these are proportional and structured in an appropriate manner.
3.8 There was also limited evidence of using market intelligence to contribute to the decision to use Competitive Dialogue. In certain cases, early market testing to ascertain whether proposed approaches would be acceptable to bidders and to confirm whether output requirements are appropriate could reduce the need for Competitive Dialogue and support a Restricted procedure approach.
3.9 The Efficiency and Reform Group is currently preparing new guidance on the Pre-Competition phase of major or complex procurements. This will encourage contracting authorities to engage with the potential supply base before starting the formal competition process. It explains there are many benefits from engaging early, such as: improving the contracting authority's understanding of their potential outcome; enabling them to tailor their requirement more effectively; and informing the procurement strategy and business case.
___________________________________________________
1 Office of Government Commerce, A Formula for Success, 2009. Page 5