Competitive Dialogue

Andrew Horsman
The Public Contract Regulations 2015 widened the circumstances in which Competitive Dialogue can be used, making it easier to justify - and there are significant benefits when this route is judiciously used.

Construction procurement is complex and there is a range of options available to clients. Competitive Dialogue is a public-sector tendering option that allows for bidders to develop alternative proposals in response to a client’s outline requirements. Only when their proposals are developed to sufficient detail are tenderers invited to submit their final tender. The aim is to increase value by encouraging innovation, while maintaining competition in bidding. The process ends in final tenders from shortlisted bidders, followed by a contract award to the winning bidder.

The use of Competitive Dialogue is expected on projects where the client is able to state its requirement at the outset, but either cannot or does not want to define the final solution. This need to keep options open can stem from technical, legal or financial issues such as alternative design solutions or risk allocation arrangements. It’s typically aimed at non-standard buildings or where innovation is required.

This procurement route enables the client and market to bring together their knowledge and expertise to develop solutions to deliver specific outcomes. Greater scope for explorative dialogue between the client and the market allows for greater co-production, scrutiny and commitment.

Benefits to the client are usually agreed as:

  • Greater range of design options
  • Opportunity to discuss solutions with the bidders over a longer period
  • Contractors are better informed, reducing uncertainty and potential for claims
  • More scope for added value
  • Risk can be openly discussed and allocated during the process.

Projects need not be extremely complex or especially large in value to benefit, although sound commercial justification for the route is essential. Faithful+Gould has recently used Competitive Dialogue to excellent effect on a £43.5m project in Ponteland, Northumberland. Northumberland County Council is moving from a three-tier to a two-tier education system and the proposed combined school and leisure centre development formed a major part of the initiative, while also improving community facilities.

To cater for the changes, the existing building was to be replaced with a new facility, with integrated primary and secondary schools, combining three buildings into one complex. Features included a pool with aqua play area, a 500-piece gym, a spinning studio and two 3G artificial pitches. The priority was quality of provision.

We had already helped to prepare the outline business case. As technical advisors, we determined a realistic fixed budget and held a design competition to attract bids that would achieve the best quality and maximise added value. In Competitive Dialogue, it’s important to engage with the local market and ensure sufficient appetite for the approach. The Public Contract Regulations 2015 require at least three shortlisted bidders, so interim reviews can subsequently be used to select two bidders who will submit final bids. This interim process reduces bidding risk to the market and is preferred by contractors.

In Northumberland, our close relationships with contractors locally were helpful. The process began with a bidders’ information day, where potential bidders could meet the client organisation and decide whether to engage. It was important that the client fully understood the methodology, and that their procurement department was assured that the process was open, fair and transparent. In this instance, we attracted six bids of sufficient quality and we shortlisted three.

The result was a successful tendering strategy that delivered a winning bid aligned to our client’s aspirations. The multi-functional site allows operational efficiencies: harder-working circulation spaces, shared services (e.g. facilities management and catering), sports facilities shared between schools and leisure centre, shared building services plant, and lower overall demand for services such as car parking.

These efficiencies released budget for added value facilities, including teaching walls in every classroom, lecture theatre and cinema, fit-out of a ‘Clip ‘n’ Climb’ climbing centre, soft play, aqua play, and increased school dining facilities. The added value to the local community via the project totalled more than £2m.

Faithful+Gould advises on and implements a range of procurement and tendering strategies, including Competitive Dialogue. We manage the tendering, letting and contractual needs of projects, ensuring that the route selected makes sound commercial sense. We’re seeing significant benefits around quality when Competitive Dialogue is used. The opportunity to increase added value is a real benefit to clients, and was certainly the case for Northumberland County Council.