For every infrastructure project valued higher than a certain amount of estimated costs, the Ministry of Transport carries out a comparative analysis of different contract options, amongst which PPP. This is part of Dutch PPP policy. The PPP option under consideration generally consists of a contract for the design, construction, financing and maintenance of an infrastructure segment, including its artworks, for a long duration. In case the PPP option turns out to offer highest value for money as compared to the other options, the PPP approach will then be pursued.
When it has been decided to use a PPP approach for the implementation of a project, the next step is to determine what procurement procedure suits best the characteristics of the project, taken that the requirements for application of the procedures posed by legislation can be fulfilled. Even though PPP reflects partnership and cooperation, it is assumed very important that the selection of the preferred private sector partner takes place in a competitive environment.
Up until 2007, two types of procurement procedure have been used by the Dutch transport Ministry in selecting the preferred partner for a PPP contract: the negotiated procedure and the competitive dialogue. The negotiated procedure has been used to procure the contract for the high-speed rail link connecting Amsterdam with Brussels; the competitive dialogue has been used for several road infrastructure projects. The competitive dialogue procedure is specifically designed for the procurement of PPP contracts.
In the table below both procedures are described in terms of general steps to be taken towards final selection of the preferred partner.
Table 3. Procurement Procedures used by the Dutch Transport Ministry
Negotiated procedure | Competitive dialogue |
Public announcement and call for candidates, including selection criteria | Public announcement and call for candidates, including selection criteria |
Application for candidacy by interested parties | Application for candidacy by interested parties |
Procuring authority selects candidates to be submitted to the procedure | Procuring authority selects candidates to be submitted to the procedure |
Procuring authority issues a programme of requirements, including publication of the award criteria and invites candidates to submit their offer | Procuring authority issues a descriptive document hence initiating the dialogue phase, which usually consists of three rounds of consultation: (a) A presentation of the general approach of each candidate (b) A consultation round to optimize tender documents per candidate (c) Final dialogue The dialogue between procuring authority and candidates takes place at bilateral level. The result of the dialogue phase is a solution per candidate, which meets the needs of the procuring authority. Procuring authority then invites candidates to make an offer based on the solution resulting from the dialogue |
Candidates submit their offer | Candidates submit their offer |
Procuring authority selects the best offer based Procuring authority analyses the bids based on on criteria | Procuring authority analyses the bids based on the award criteria and enters the final stage with the preferred bidder |
Procuring authority analyses the bids based on the award criteria and enters the final stage with the preferred bidder offer | |
Contract signature N.B. In case no agreement can be reached during negotiations, the procuring authority can negotiate with the second best candidate. | Contract signature |
As can be noticed in both procedures, selection of the preferred bidder in fact happens in two stages. First of all, candidates have to comply with selection criteria to be submitted to the procedure. These can include criteria on financial solvability, track record, etc. Second, a preferred candidate is being selected by analysis of his offer as compared to other offers, based on award criteria, which have been made public in advance.
The award criterion used in the competitive dialogue is the most economically advantageous tender. In the Dutch practice this is determined by the net present value (NPV) of the offer, the value of the risks left with the procuring authority and the value of the demands, which cannot be met by the candidate's offer. The bid with the lowest sum of these three factors offers the most economically advantageous tender.
The lessons learned from procurement of PPP projects up until now in the Netherlands can be summarized as follows:
(a) A good PPP tender process requires careful and extensive preparation by the procuring authority; this includes reserving enough time and capacity to organize the tender and to maintain a strict control and planning during the process.
(b) A clear and unambiguously defined objective of the project and procurement procedure, which is regularly updated, is of vital importance for a successful tender procedure.
(c) Special care should be taken to guarantee confidentiality where relevant, because this is key to a transparent and non-discriminatory procedure. This also includes aspects of integrity within the procuring authority itself.
The elaboration of the criteria for selecting candidates and awarding the contract requires special consideration. The criteria should be formulated as objectively as possible, in order to maintain equal treatment of candidates during the procedure. Since procuring a PPP contract is a complex matter, it pays off to offer a clear explanation and guidance to candidates during different stages of the procedure. This helps them to be efficient in composing their offer and also creates an atmosphere of trust which is needed to reach an optimal solution.