32.1.1 The European law relating to public procurement, including PFI, was changed by the European Council's Directive on the Co-ordination of Procedures for the Award of Public Contracts, Public Supply Contracts and Public Service Contracts dated 31 March 2004.587 This directive introduced the competitive dialogue procedure for use in particularly complex contracts like PFI. Regulations implementing this directive into Northern Irish law came into effect from 31 January 2006.588
The main features of the competitive dialogue procedure are:
• dialogue is allowed with selected suppliers to identify and define solutions to meet the needs and requirement of the Authority;
• dialogue may be conducted in successive stages, with the aim of reducing the number of solutions/bidders;
• the award is made only on the most economically advantageous tender criteria; and
• there are explicit rules limiting post-final tender and post-award changes to the bid.
The OGC produced guidance589 on the competitive dialogue procedure in January 2006. This set out that competitive dialogue is intended for use in complex projects and that the competitive negotiated procedure should only be used in very exceptional circumstances. In England, further guidance is also becoming available on a sector by sector basis.590
32.1.2 The competitive dialogue procedure will be used for most mainstream PFI procurements in mature markets whilst negotiated procedure remains available for exceptional circumstances591. Authorities should in future do greater "front end" work: engaging and informing the market; developing robust project governance; planning their procurement; developing their specification; being clear of their requirements; preparing their data; checking their property interests; commissioning relevant surveys (which may be relied upon by bidders); issuing well developed contracts at the start of the dialogue; and, ensuring they have in place adequate project governance arrangements such that relevant internal approvals are obtained prior to closing the dialogue. Not only is this likely to lead to a more efficient quicker procurement, it will help achieve compliance with the requirements of the competitive dialogue process.
32.1.3 Under the new competitive dialogue procedure, all substantial aspects of the bid need to be agreed before conclusion of the dialogue. The dialogue process should be used to identify the best means of satisfying the Authority's needs. The dialogue should continue until the Authority has identified and defined its requirements with sufficient precision to enable final bids (which meet those requirements) to be made. At that time the Authority should be able to identify one or more solutions to its requirements (since, as a result of the separate dialogues, different solutions may have been developed). A call for final bids should then be made and the winning bidder selected. After final bids have been submitted, it is only permissible to clarify, specify and fine tune. This does not necessarily mean that the Contract has to be complete in every detail at this stage, but it does mean that, after this time, no changes may be made to the basic features of the bid which are likely to distort competition or have a discriminatory effect. It is just as important that the Authority adheres to this rule as the bidder. This means that effectively, the Authority's own project decision-making must be complete by the call for final bids and there can be no further changes to the Project arising from further approvals process.
32.1.4 Effective project governance arrangements will help to minimise the risk of failure to comply with the requirements of the competitive dialogue procedure. Maintaining project governance structures and forums throughout the procurement will provide project direction and should ensure that approvals - for example with regards to the requirement and affordability - are in place at the required points in the competitive dialogue process. Additionally project governance structures will assist with project reporting and stakeholder management and hence reduce the likelihood that late changes will need to be introduced. If Authorities implement appropriate project governance frameworks, prepare for their procurements as outlined in Section 32.1.2, and manage their dialogues effectively, they should not need to budget any more time to complete a competitive dialogue procurement than a competitive negotiated procurement.
32.1.5 It is to be expected that some parts of the Contract will still need to be clarified or confirmed post-award. This is permissible provided that it does not have the effect of modifying substantial aspects of the bid, distorting competition or causing discrimination. For example, at award discussion the final detailed design may not be completed, detailed planning permission may not yet have been granted, detailed site surveys may still need to be done, and the final swap rate (which determines the Unitary Charge) may not be fixed until Financial Close. Where such aspects remain to be completed it is important that the Contract, or rules of the tender, lays down a clear and non-discriminatory mechanic governing the finalisation of these issues. Further guidance on this may be available on a sector-by-sector basis.592
32.1.6 Under the standstill provisions contained in The Public Contracts Regulations 2006 (regulation 32), an Authority must allow a mandatory minimum ten-day standstill593 period between the notification of a contract award decision and the entry into of the Contract. In addition, the rejected bidder may request a debrief and conditions relating to the provision of information apply within this standstill period.594
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587 Directive 2004/18/EC.
588 The Public Contract Regulations 2006 (S.I. 2006 No5), regulation 18.
589 See www.ogc.gov.uk/documents/guide/competitivedialogue.pdf.
590 See (a) "How to Conduct a Competitive Procurement" January 2006 on Partnership for Schools website, (b) The Department of Health "The Private Finance Initiative How to Conduct a Competitive Dialogue Procedure" November 2006 consultation draft on the DoH website, (c) 4ps A Map of the PFI process using Competitive Dialogue June 2006 (and related Competitive Dialogue Process diagram November 2006) on the 4ps website.
591 Authorities should however seek their own legal advice on a project by project basis.
592 See footnote 587 above.
593 See OGC guidance on the standstill period on its website at www.ogc.gov.uk.
594 Good practice would see projects maintaining a "procurement file" of key decisions and information which could then form the basis for the debrief.