1.2.1  Competitive dialogue

The competitive dialogue procedure limits adjustments to the final offers submitted to a procuring authority to "confirmation of commitments" and "fine tuning", enabling financial close shortly after the selection of the preferred bidder. In order to satisfy this requirement, most procurers have taken the pragmatic approach of requesting fully committed final tenders. This is proving increasingly difficult in the current market and the duration of commitments rarely goes beyond a month. In most cases procurers are faced with reduced levels of commitment requested from the lenders at final offer as well as the duration of these commitments.

There is no evidence that this applies to equity which is generally still available on a fully committed basis.

Procurers may opt for different procurement procedures in certain cases (e.g. negociated procedure). However, in most cases they have to adjust the competitive dialogue process to reduced levels of financial commitments, up to financial close.

PROS: Insisting on fully committed offers is likely to increase the cost of small projects or to severely delay or cause the failure of large projects.

CONS: Selecting a preferred bidder on the basis of a non-committed offer creates a moral hazard and an execution risk. They include "bait and switch" tactics by bidders, increased risk of litigation by rejected bidders and the issue of how to maintain the integrity of the winning bid when the financing still needs to be finalised.