Competitive dialogue under Reg. 30 Public Contracts Regulations 2015

Reg. 30 of the Public Contracts Regulations 2015 (PCR2015) sets up the specific rules that contracting authorities need to follow when they organise competitive dialogues, provided they are covered by the grounds specified in regs. 26(4) to (7) PCR2015 (which will not be too difficult, see here and here). The transposition follows closely the wording of Art 30 of Directive 2014/24, with minor drafting improvements and a more detailed structure. For Pedro's insightful, as well as incisive and provocative comments on this, his particular pet subject, see here.

The regulation of the competitive dialogue under the 2004 EU procurement rules (which created it) had given rise to significant academic debate and there was a general consensus about the legal uncertainty that the limited detail and the vagueness of the EU rules created [see S Arrowsmith & S Treumer (eds), Competitive Dialogue in EU Procurement (Cambridge, CUP, 2012)]. However, as recital (42) of Dir 2014/24 points out
[the] use of the competitive dialogue has significantly increased in terms of contract values over the past years. It has shown itself to be of use in cases where contracting authorities are unable to define the means of satisfying their needs or of assessing what the market can offer in terms of technical, financial or legal solutions. This situation may arise in particular with innovative projects, the implementation of major integrated transport infrastructure projects, large computer networks or projects involving complex and structured financing.
Hence, its practical relevance and the need to overcome previous regulatory uncertainty provided a good justification for a revision of the rules applicable to that procedure. In its post-2014 configuration, the competitive dialogue is structured as a multi-phase selective process based on the restricted procedure, which necessarily consists of at least three phases: expression of interest and short-listing, technical negotiation (or dialogue) leading to the specification of the technical and financial aspects of the procurement, and final tender (subjected to further fine-tuning and negotiations with best bidder).

In its configuration under reg.30 PCR2015, the competitive dialogue is quite difficult to distinguish from a competitive procedure with negotiation (reg.29 PCR2015) except for two issues: (a) the level of specification of the contracting authorities' needs and requirements under a competitive dialogue is (apparently) less demanding than that applicable to competitive procedures with negotiation; and (b) competitive dialogue cannot result in an award based on price or cost effectiveness only. 

Hence, these may be the two issues that contracting authorities may take into consideration when they opt for one over the other [but, admittedly, these are issues that remain at the margin and hardly justify the multiplication of procedures based on the restricted, but allowing for negotiations; see Telles and Butler, "Public Procurement Award Procedures in Directive 2014/24/EU", in F Lichere, R Caranta and S Treumer (ed) Modernising Public Procurement: the new Directive (Copenhagen, Djof Publishing, 2014) 131-184].

(a) On the issue of the establishment of the contracting authorities' needs and requirements, it is worth stressing that reg.30(6) PCR2015 determines that contracting authorities shall set out their needs and requirements in the contract notice and shall define those needs and requirements in that notice or in a descriptive document. 

Those needs and requirements cannot be changed despite the technical dialogue in which the contracting authority must engage, given that reg.30(18) PCR2015 clearly demands that the tenders and any clarifications, specification or optimisation thereof, or any additional information, may not involve changes to the essential aspects of the tender or of the public procurement, including the needs and requirements set out in the contract notice or in the descriptive document, where variations to those aspects, needs and requirements are likely to distort competition or have a discriminatory effect. 

Even further, the final negotiations in which the contracting authority can engage with the best tenderer need to respect the limit that they cannot not have the effect of materially modifying essential aspects of the tender or of the public procurement, including the needs and requirements set out in the contract notice or in the descriptive document and does not risk distorting competition or causing discrimination [reg.30(20) PCR2015].

Consequently, even if reg.30 PCR2015 does not have a strict equivalent to the rule under regs.29(2)(b) and 31(2)(b)PCR2015, according to which the procurement documents of a competitive procedure with negotiation or an innovation partnership must "indicate which elements of the description define the minimum requirements to be met by all tenders," the combined effect of regs.30(6), 30(18) and 30(20) PCR2015 may be quite similar. 

The only advantage for the contracting authority may be to try to benefit from that (apparent) limited prescriptiveness by setting out its needs and requirements in vague terms, or by allowing for non-substantial modifications during the technical dialogue, tender or final negotiation phase. However, this will expose it to litigation based on discrimination and distortion of competition [reg.18 PCR2015], which does not seem a particularly desirable scenario. In the end, then, contracting authorities will be advised to draft their needs and requirements for a competitive dialogue as if the were "minimum requirements to be met by all tenders", and stick to them.

(b) As regards the difference in award criteria available under competitive procedures with negotiation and competitive dialogues, it is worth stressing that reg.30(5) PCR2015 expressly sets out that the contract shall be awarded on the sole basis of the award criterion of the best price-quality ratio. Conversely, contracting authorities retain the possibility to award the contract under a competitive procedure with negotiation on the basis of price or cost effectiveness only. 

Nonetheless, it would be very hard to square that possibility with the use of that procedure itself [other than in regard to works, supplies or services where, in response to an open or a restricted procedure, only irregular or unacceptable tenders are submitted; reg.26(4)(b) PCR2015], due the need to have a full set of completely closed technical specifications if the contracting authority only wants to negotiate on the basis of cost/price. Otherwise, engaging in technical and financial negotiations but only taking the latter into consideration for award purposes would in my view exceed the acceptable degree of discretion available to contracting authorities.

Overall, then, the actual advantages of the competitive dialogue over the competitive procedure with negotiation, or the differences between them, seem rather minimal--not least because contracting authorities could use the blueprint of the competitive dialogue to set out the rules and phases applicable to their competitive procedure with negotiation under reg.29(19) PCR2015 and, in that case, it would be almost impossible to distinguish between both procedures [except for the specific authorisation to engage in further negotiations with the best tenderer under reg.30(20) PCR2015, which could be accommodated by a delayed closure of the negotiations under reg.29(21) PCR2015.

A final remark that may be worth stressing is that reg.30(21) PCR2015 allows contracting authorities to specify prizes or payments to the participants in the dialogue. This could trigger State aid issues if the prizes were excessive or if they were not awarded in an objective and transparent manner.