As those of us who’ve ever been involved in a system or solution procurement activity will know, they can be fraught with complexities. Aside from the painstaking task of eliciting hundreds of lines of requirements, navigating the constraints of what is commonly a very bureaucratic process can also put a dampener on innovation in tender responses.
An alternative allowing for a more flexible, transparent and exploratory approach to engage with vendors – whilst also refining your solution options – is the Competitive Dialogue (CD) tender process, which originated in the European Union to facilitate public sector procurements.
We have recently had an experience in supporting a client through such a process and found it be a refreshing and powerful procurement approach – particularly when dealing with a large complex project needing deeper supplier/market insight to figure out the best direction.
The key difference in the CD process is the provision to discuss different options with bidders with a view to identifying the best solution(s) to meet its needs. Final tenders are subsequently invited on this basis, which contrasts against the traditional approach of issuing a defined set of solution and contractual deliverables and requesting supplier proposals.
In its simplest form, there are 3 stages to a Competitive Dialogue process;
The Planning Phase
- Identify a supplier shortlist through market research or an invitation to participate
- Clearly set out the competitive dialogue process and governance model for its management
- In the case of Chamonix’s client, a probity plan was established to provide assurance on areas such as handling of confidential information, conflict of interest, protecting supplier’s IP during the process and where it can be shared with others to inform solution outcomes
- An overview of the organisation’s needs would also be provided at this time
- Arrange workshops or other mechanisms for engaging with suppliers
The Dialogue Phase
- Engage with suppliers through meetings/workshops to discuss needs and refine requirements/solution options
- In the Chamonix client example, we ran a Proof of Concept (PoC) with all the suppliers to trial possible solution options and inform requirements
- It is essential that all interactions are recorded and relevant information shared between suppliers is tracked and managed to maintain audit trails and ensure no supplier is given undue advantage
- The requirements are finalised through this process and as in the case of our client, a Requirement for Tender (RfT) was issued in parallel to completion of the PoC
The Post dialog phase
- This is where the shortlisted suppliers are now invited to submit formal tenders and the collaborative element gives way to more structured standard procurement engagement terms
- Evaluation of responses – note, it does help to issue evaluation criteria early in the process where possible to ensure suppliers are clear on how their responses will be assessed
- Selection of preferred supplier and establishment of contracts
- Debrief of suppliers who were not successful, noting this is an important and valued step by respondents especially where you may tender for their services in the future
There are some considerations worth noting when undertaking a CD process;
Doing your homework is key when it comes to assessing market and shortlisting candidates
- By its nature, the CD process can be a significant investment for your organisation but also for the suppliers, who may put some off from responding. For large scale complex projects with lengthier processes, you may consider part funding the dialogue process or, as in our clients case, their CD activity may be co-funded with partner organisations
- Set out and maintain realistic timelines for the CD process
- All parties involved are clear on the process and probity requirements with your legal representation engaged from the outset
With careful and diligent preparation and planning to mitigate the above, the benefits of a CD process are clear;
- Suppliers are able to better understand your needs, leading to a better solution fit and outcome
- It enables innovation in solution options across suppliers
- It allows the purchasing organisation to assess and develop working relationships with potential suppliers
- It can expedite the process for evaluation, selection and contract negotiation
- Assists in supplier confidence and commitment for resourcing and pricing in their response
If your organisation has a complex solution requirement or need but you’re unsure how these needs can be met, the competitive dialogue approach may be worth considering. Talk to us about how we can help you navigate a different way to procure the right outcome.