3.33 In 2007 the Public Accounts Committee (PAC) observed that prior to the introduction of the Competitive Dialogue procedure, one third of public sector teams made changes to PFI projects after they had selected a single, preferred bidder.1 The PAC noted that with the introduction of the new procurement regulations, it would be expected that the incidence of late changes would decline, but recommended that HM Treasury review whether or not the new regulations have been effective.
3.34 To respond to this recommendation HM Treasury has carefully considered current practice under Competitive Dialogue compared to that under the Negotiated procedure and understands Competitive Dialogue has successfully addressed the issue of protracted post-preferred bidder discussions. Based on evidence received during the review, the period from Preferred Bidder stage to Financial Close for PFI projects is shorter under Competitive Dialogue and the practice of making late changes to contracts appears to be much reduced.
3.35 In addition to reducing the scope for significant changes to be made to contracts following the completion of the competitive stage of the process, the introduction of the Competitive Dialogue procedure has brought valuable discipline to the post-preferred bidder period, introducing a clear and structured process, with a contracted deadline for closing projects.
3.36 However the process governing post-Dialogue discussions has introduced some new challenges and is provoking diverse opinions for authorities and bidders alike.
3.37 When asked to what extent did the limited room for manoeuvre following the close of dialogue cause practical difficulties, 49% of project specific responses reported no difficulties at all. This stands in contrast to 86% of general survey respondents reporting at least minor difficulties, including 15% experiencing considerable difficulties.
3.38 Disproportionate amounts of bid costs are being incurred by bidders prior to the closure of dialogue on procurements where an overly prudent approach is taken to the interpretation of clarify, specify and fine tune. There are clear inconsistencies in advice across the legal sector on what is permissible under the terms of the Regulations.
Box 3.A: Seeking legal consensus on Competitive Dialogue
| Contracting authorities are heavily influenced by their legal advisers on a wide range of issues surrounding Competitive Dialogue, from the original decision to pursue Dialogue over alternative procurement routes, to behaviours during Dialogue, approaches to evaluation and the interpretation of "clarify, specify and fine tune". HM Treasury has engaged with the Procurement Lawyers Association and legal advisers from the PPP Forum with a view to encouraging the legal sector to debate these issues more widely. Both organisations are keen to develop a series of papers on the subject, to be produced collaboratively by a working group of experienced practitioners. The review welcomes this work as a positive step towards achieving a consensus view on these crucial aspects of Competitive Dialogue delivery. |
3.39 The shorter timeframe post Preferred Bidder has also created the opportunity for an unintended adverse consequence. Contractors previously used the period leading up to contractual close for resource mobilisation. In some cases the shorter time span is proving insufficient to get adequate sub-contracting arrangements in place, and care must be taken to avoid delays on early deliverables.
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1 House of Commons, Committee of Public Accounts, "HM Treasury: Tendering and benchmarking in PFI", 2007. Page 5.