Would Competitive Dialogue be a better approach for your next procurement?

By Louise James - March 25, 2019

Originating approximately 15 years ago in the European Union (EU), Competitive Dialogue (CD) is a process primarily designed to provide greater flexibility in large, complex procurements. Also used in New Zealand, although under less strict guidelines, CD is now gaining popularity as a procurement process in Australia.

So, what is a Competitive Dialogue process?

Competitive Dialogue is a unique procurement process that incorporates discussion sessions or workshops between the procuring organisation and the potential respondents to a Request for Tender (RFT) or Request for Proposal (RFP). The incorporation of workshops with potential respondents is not unique – for instance, Public Private Partnerships include Interactive Tendering Workshops. What is unique about CD is the timing of, purpose and desired outcomes from the workshops as well as the level and type of information shared by respondents, which may even include the sharing of their designs and concepts to inform the final solution. The table below highlights the key differences in the nature of CD sessions and interactive tendering workshops.

Aspect

Competitive Dialogue

Interactive Tendering Workshop (or similar)

Timing

Sessions are held prior to issuing the RFT/RFP

Sessions are held after the RFT/RFP is issued

Purpose

Development of the requirements (specifications) via discussion of potential solutions in order to inform the RFT/RFP

Expand and clarify respondents’ understanding of requirements (specifications) as set out in the RFT/RFP

Sharing of information

Aspects of different respondents’ designs and concepts may be shared (to the extent agreed) in order to inform the solution

Elements of a respondent’s designs, concepts and solutions are not shared with other respondents

Questions and answers

Questions and answers are aimed at developing the requirements to be subsequently issued to shortlisted respondents in an RFT/RFP

Questions and answers are focused on clarifying the requirements and seeking guidance on the extent the proposed solution meets requirements.  Endorsement, approval or evaluation of concepts or technical solutions is not provided to respondents

Intellectual Property (IP)

Agreement reached prior to dialogue sessions with each shortlisted respondent in relation to ownership of (1) existing IP (generally listed within non-disclosure agreement) and (2) new IP developed in the dialogue sessions

Respondent IP is protected and not disclosed to any other party

The CD process comprises three (3) phases:

  • Planning phase – encompassing procurement planning activities and what is referred to as an ‘Invitation to Participate (ITP)’.  The ITP will be issued to the market for the purpose of shortlisting respondents to participate in the dialogue phase;
  • Dialogue phase – involving dialogue sessions with shortlisted respondents to discuss needs and refine requirements; share requirements as they evolve with all shortlisted respondents; respondents continue to develop solutions to meet the evolving needs. The developed solution/s will inform the final specifications;
  • Post-dialogue/closing phase – shortlisted respondents submit proposal/tender in response to the refined requirements from the dialogue phase. These proposals/tenders will be evaluated in order to select a preferred supplier for contract.

Why use a Competitive Dialogue process?

CD works well when an organisation knows what it needs but is unclear on how these needs can be satisfied. Further, the organisation may not be able to discuss its requirements without discussing the possible solutions and CD therefore provides a framework in which to do this. CD can also be a useful tool where there is a lack of certainty around commercial aspects – financial or legal – of the procurement.

Advocates for the CD process include the following in the list of benefits:

  • Allows for better fit-for-purpose customised solutions to be designed
  • Promotes innovation
  • Reduces the time required for evaluation and negotiation
  • Adds value through relationship building during the process and enables assessment of cultural fit
  • Maintains competitive tension leading to better value for money outcomes

Things to be aware of:

  • Planning and market research are key to success
  • CD can be an expensive and resource-intensive exercise
  • Need to set a realistic timeframe for the prcoess
  • Need to agree and document IP ownership in the process

For your next complex procurement in a competitive market where you are not sure what requirements need to be met, Competitive Dialogue should be on the table for consideration as your procurement approach.

To ensure a successful outcome, consider whether your organisation has the required skills to plan and deliver the process or if you need to look externally for support.


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