Competitive Dialogue Procedure - Is It Working For Or Against The Construction Industry?

At the end of last year, HM Treasury published its review of the Competitive Dialogue procedure, or CD - this procedure was introduced in the EU public sector procurement directive for use in the award of complex contracts such as those covered by the Private Finance Initiative. Nick Maltby, of top 100 law firm Bircham Dyson Bell, looks at the outcome of the review.

Competitive Dialogue has now been with us since the beginning of 2006 and more than 1200 procurements have been undertaken using the procedure. But does it do the job for which it was intended?

Given the outcome of HM Treasury's report, it would seem the answer is - not entirely - a conclusion, which is at odds with many of the findings as its recent review found that there is much wrong with key aspects of CD procurement.

HM Treasury's undertook the review to establish the size of the UK CD market, identify the types of complex procurements being undertaken and better understand the skills and capacity of contracting authorities using CD.

And the report concludes, at a high level, that where CD is being used appropriately it provides a positive addition to the procurement toolkit - however it can become burdensome and expensive.

The report focuses on three main areas: Delivering Competitive Dialogue in the UK; Competitive Dialogue in Practice; and Key Areas of Concern.

Delivering Competitive Dialogue in the UK

We're struggling with a large public sector skills gap, according to the findings - few public sector employees have undertaken more than one CD procurement, with a resultant impact on how they can resource the procedure. There's also little idea as to how much a procurement might cost.

And there's confusion over the purpose of CD. While it was intended to deal with large and complex purchases such as infrastructure or large building projects, the review showed that at least half of the CD procurements were for projects of under £5m - in some cases it was actually used for purchasing detergent or printing a newsletter. As a result, going forward public bodies will be asked to justify their choice of procedure.

When it comes to using or understanding CD, matters are little better in the private sector outside the major construction, IT and outsourcing companies.

Competitive Dialogue in Practice

Many of those questioned believed that CD maintained competitive tension, but there are a number of issues with how the procedure is conducted in practice. According to the report...