The awarding method is the cornerstone of the private partner selection process and plays a significant role in the success or failure of the joint project. Awarding process is not important for the joint projects only, but it also important for any projects carried out by the State through the traditional awarding processes.
Given the importance of the awarding method and the negative impacts on trade due to discrimination between participants, World Trade Organization issued, in conjunction with its establishment agreement in 1994, the Agreement on Government Procurement that came into force in 1996. This agreement constitutes an effective and multilateral framework for the rights and obligations related to the government procurements in order to liberalize the world trade.
This agreement parties are obliged to avoid discrimination against foreign products, services or suppliers in the awarding process. They shall be treated in the same way the local products, services and suppliers are treated. To ensure compliance with the principle of non-discrimination, the agreement stresses on promoting the transparency of awarding procedures in laws and regulations relating to the government procurements.
That agreement states the awarding methods that may be adopted for the government procurement, namely:
• Open Procedure: This procedure allows all interested suppliers to submit their bids. It is also known as "Public Tender".
• Selective Procedure: This procedure allows only the qualified suppliers to submit their bids. It is also known as "Closed Tender".
• Limited Procedure: This procedure allows only the suppliers invited for bidding to submit their bids, and it is also known as "Limited Practice".
In line with the Agreement on Government Procurement issued by World Trade Organization, the European Union issued awarding rules allowing three methods:
• Open Procedure
• Restricted Procedure: In this procedure, the bid submission requirements are discussed with participants after their qualification. Then, the bidding requirements document is issued. Some clarifications may be issued later. After submitting the bids, dealing with participants shall be stopped and no negotiations shall be made thereafter. The winning bidder shall sign the PPP contract based on the bid it submitted.
This method is adopted in franchises awarding in states such as Italy and Spain, and it is characterized by its speed and reduced cost for participants. It is the preferred method for awarding in those states because there are concerns that post bidding negotiations may involve corruption.
• Negotiated Procedure: This method is adopted in awarding the complicated projects. The bidders may submit various solutions for the required service and it may not be easily to identify the method of bid assessment in advance. This matter requires discussing bids with bidders after submission. However, inquiries and requests for clarification shall not lead to material amendments in the submitted bid basics. It is assumed that the detailed negotiations include all bidders. This awarding method reflects to some extent the rules developed under Agreement on Government Procurement issued by World Trade Organization that allows negotiation. The scope of inquiries has been extended with the application of this method. The concerned entity selects the best bidder after submitting initial bids by three bidders. This step is followed by negotiations leading to submitting the two best and final bids by two bidders (This may be followed by a last round in which the last and final bid is submitted). Accordingly, detailed and extended negotiations would be made with best bidder before awarding the contract thereto. This awarding method is not significantly different in UK. However, some European countries, especially those who have strict laws in respect of the traditional awarding methods, expressed some concerns in terms of the transparency of this method due to the high level of negotiation carried out after bidding, a matter that prompted the European Union to introduce a new awarding method in 2006, i.e the Competitive Dialogue method.
• Competitive Dialogue: This method is characterized by the dialogue carried out with the qualified bidders. The purpose of this bilateral dialogue is to discuss the PPP contract form and the technical outputs of the joint project. Bidding requirements document is developed based on the results of this dialogue. The concerned entity may conduct a dialogue with bidders after issuing bidding requirements document to address any matters may arise in the PPP contract, a matter that may require amending the project requirements before bids submission. This method differs from the negotiated procedure method as it has a limit for negotiation after submitting bids, where the dialogue in this phase shall be limited to replying to the inquiries and requesting clarifications that may be required by the concerned entity.
Due to the complexity of the PPP contracts, especially in infrastructure projects that constitute the majority of the joint projects implemented by virtue of PPP contracts, the competitive dialogue may be the most appropriate way to select a partner from the private sector.