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Competitive dialogue

Is the latest procurement trend just an expensive new toy for the public sector?

LAST WEEK, the Olympic Delivery Authority (ODA) con med it would be using competitive dialogue to procure a contractor for the London 2012 Aquatics centre (see news).

This announcement came little over a year after the ODA became the first UK public body to use the method when it procured the Olympic Delivery Partner (NCE 2 February 2006).

Since then, 366 public contracts across all sectors have been tendered in the UK using competitive dialogue. Out of 3,705 projects procured in the construction sector since competitive dialogue was embedded in UK law on 31 January 2006, 119 have been procured using the method.

The method was devised by the European Union (EU) to aid the procurement of large, complex projects and contracts. But its popularity in the UK suggests that its use may be spreading to work where simpler, less demanding methods would sufce.

This is a worry for the construction industry, as competitive dialogue involves a vastly more expensive bidding process (see graph). There is also concern that clients could abuse the method as a way of getting contractors to help them to dene projects with no guarantee that they will win work at the end of the process.

It is easy to see why some clients favour competitive dialogue.

Although the process may initially cost them more, not only do they gain the advantage of a competitively-priced contract by dealing with several bidders, but the process allows them to get to know the individuals that might deliver their scheme, through multiple presentations and day-long role simulations.

'There are an awful lot of projects that, with a little more thought and more preparation, could go down the restricted [non-competitive dialogue] route, ' Mouchel Parkman, project director David Richmond-Coggan told NCE's 'New Procurement Methods and Competitive Dialogue' conference last week.

'The public sector always has to use the latest toy when it comes to procurement, ' said another delegate at last week's conference.

But clients are playing a risky game if the latest procurement fashion is dictating their preference for competitive dialogue.

It has been suggested that this approach can derail the prospect of clients getting better value for money from competitive dialogue, as the high cost of bidding means less companies are likely to bid, thereby reducing competition (NCE 26 October 2006).

In response, the ODA's head of procurement, Morag Stuart, says she is aware of the high costs involved. This explains why there will be a two-stage competitive dialogue process for the Olympic Aquatics Centre contract. This would see the short list cut from between four or six bidders to two or three at the end of the initial stage of the dialogue process, so that those with the best chance of winning work incur the highest bidding costs.

But questions remain about whether the Aquatics Centre really needs to be procured using competitive dialogue at all. It already has a detailed design courtesy of Zaha Hadid and Arup, so procurement should really only involve the choice of the best contractor for the job.

After a year of competitive dialogue in the UK, the jury is out in its effectiveness. But there is some hope that the method will find its feet.

'All the signs in Europe are that once people get used to this way of doing things, the costs do start to come down, ' says Fresh ds associate solicitor Christof Lessenich, who advised the ODA on the use of the process to procure its Olympic delivery partner.

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