The Competitive Dialogue: A powerful tool to procure Value for Money PPP Projects Respa Conference on PPPs 23&24 June 2014, Danilovgrad, Montenegro
Today s presentation Introduction and background What is Competitive Dialogue? When to is it possible and pertinent to use it? How to manage a Competitive Dialogue? Conclusion: What you ought to remember 2
Introduction and Background 3
What is Competitive Dialogue? A procurement procedure established by the 2004/18/EC directive on the coordination of procedures for the award of public work contracts, public supply contracts and public services contracts Which is defined as a flexible procedure whereby the Authority conducts a dialogue with the candidates ( ) with the aim of developing one or more suitable alternative capable of meeting its requirements Which can be considered as an intermediary solution between the negotiated and restricted procedures Around 4 000 CDs launched since 2004 4
When to use it? Allowed for particularly complex projects: The authority is not objectively able to define the technical means ( ) capable of satisfying its needs or objectives and/or Not objectively able to specify the legal and/or financial make-up of project Often pertinent for: Big infrastructure projects: transport, buildings, etc. When functional design and technology are critical to the success When there is no proven/standardised approach (e.g. unlike street lighting in France) Is regularly the best procurement option for PPPs Especially useful to secure the project s Value for Money 5
How to manage a Competitive Dialogue? 6
Process-flow from the contracting authority point of view Procurement preparation Procurement Procedure Procedure initialisation Competitive Dialogue Final Bids Stage Hire advisors Publish a Procurement Notice (OJEU) Invite to participate in dialogue Invite submission of final bids Draft descriptive document setting out needs/requirements Period for pre-qualification application preparation Reasonable time for preparing project proposals Reasonable time for preparing final bids Draft a preliminary risk matrix and/or contract Draft tender rules Receive pre-qualification applications Select pre-qualified candidates Analyse project proposal Written & oral exchanges Evaluate bids, seek clarification Select preferred bidder Notify rejected candidates Inform preferred bidder Clarify, fine-tune and sign the contract 7
Process-flow from a bidder point of view Upstream preparation Procurement Procedure Procedure initialisation Competitive Dialogue Final Bids Stage Business opportunity identification Identify procurement notice Receive tender documents Receive invitation to submit final bids Possible informal interaction with the public authority Decide to participate Form a consortium Explore pertinent technical and economic solutions Analyse specific legal and financial issues Prepare final bid Get approval from investment committees (and financing committees) Select a project director Prepare financial model Formulate final proposal Hire advisors Define/adjust bidding strategy Time for assessing bids Prepare pre-qualification applications Formulate proposal Clarify, fine-tune and sign the contract Time to select pre-qualified candidates Time for analysing proposals Written & oral exchanges Financial closing 8
All aspects of the project can be discussed Legal and financial make-up Risk allocation and mitigation Costs and revenues Payment mechanism Technical solutions available to meet functional requirements Outputs definition and measurement Intensification of the Dialogue 9
Dialogue s objectives Contracting authority Private bidders Arouse and select the most economically advantageous bid to answer its needs Participate in the design of pertinent technical solutions Judge relevance of the proposed technical solutions Check the overall coherency of the technical, economic, legal and financial aspects of the proposed solutions Transfer risk it can t manage appropriately or doesn t wish to bear Assess credibility of revenues and costs forecasts Maintain a competitive climate within the procurement procedure Seek for the best Value for Money Ensure the legal security of the procedure To be selected by the contracting authority with a profitable bid Identify and prioritize explicit and implicit expectations from the authority Get information about the project context Get answers to the issues raised during the proposal preparation Pass on messages in order to influence the authority Protect the project s profitability by, in particular, limiting risk transfer Progress in the design of the technical, financial and legal solution to be implemented Make sure its personal-knowledge won t be disclosed to competitors Propose the best solution to satisfy the authority and win the tender 10
What you ought to remember 11
What you ought to remember Competitive dialogue is a powerful tool: Allow to optimise risk allocation and value for money Allow to tackle as many issues as possible at a time where there is still some competition among candidates Allow for sustainable innovation Offer a significant flexibility within the borders of public procurement principles: equal treatment, transparency, proportionality Appropriate for procuring complex PPP projects such as major infrastructure and building projects Require awareness and means on the public side to properly manage the process and be able to interact with candidates 12
Thank you for your attention! Clément Fourchy Principal Advisor European PPP Expertise Centre epec@eib.org www.eib.org/epec Twitter: EpecNews Telephone: +352 4379 22022 Fax: +352 4379 65499