Under the Directive/Regulations there are three competitive procedures where negotiation between the contracting authority and tenderers is permitted. These all start with a call for competition in the OJEU but the subsequent process varies. The three procedures are:

  • The Competitive Procedure with Negotiation (CPN)
  • Competitive Dialogue (CD)
  • The Innovation Partnership procedure

This Byte looks at the first two procedures. Innovation Partnerships will be covered in a separate Byte.

The use of procedures where negotiation is permitted is likely to be easier to justify than at present. This reflects the aim set out in Recital 42 of the Directive to provide additional flexibility to contracting authorities wishing to choose a procedure which provides for negotiation. However:

  • There are more controls over the conduct of CPN than is currently the case with the negotiated procedure with prior publication of a notice (known as “competitive negotiated procedure”). 
  • The amended provisions on CD now specifically permit limited negotiation with the preferred bidder.

When can you use CPN and CD? Article 26/Regulation 26

Under the current rules different conditions apply to the use of the competitive negotiated procedure and CD. This has changed. Under Article 26/Regulation 26(4)  the conditions are the same for both CPN and CD. They are (paraphrased):

  • Adaptation: where the needs of the authority cannot be met without adaptation of readily-available solutions
  • Design and innovation: where the needs of the authority include design or innovative solutions
  • Complexity: where the contract cannot be awarded without prior negotiation because of specific circumstances related to the nature, the complexity or the legal and financial make-up or because of risks attaching to them
  • Technical specification: where the technical specification cannot be established with sufficient precision with reference to a "standard, European Technical Assessment, Common Technical Specification or Technical reference".
  • Where only irregular or unacceptable tenders are submitted in response to an open or restricted procedure

These conditions appear to be more generous and easier to satisfy than the conditions under the current legislation, although there is room for debate around their precise meaning. In the case of irregular and unacceptable tenders, however, there are specific, non-exhaustive,  provisions setting out when a tender will be considered "irregular" or "unacceptable". It will be important for contracting authorities using CPN or CD to have a well documented audit trail demonstrating how they meet the conditions for use of these procedures.

Competitive Procedure with Negotiation - more than just a name change. Article 29/Regulation 29

Under the current rules the “competitive negotiated procedure” has very limited provisions relating to the negotiation stage. It has been interpreted by some contracting authorities in the UK as a permitting a more “relaxed” approach and, in particular, quite extensive negotiations with the final “preferred” bidder after submission of final tenders.

The CPN is a more heavily regulated procedure than the competitive negotiated procedure. It requires contracting authorities to specify award criteria and minimum requirements up-front in the procurement documents. It introduces a new 30 day statutory time limit for submission of “initial tenders” (see Procurement Byte 3). Those initial tenders then form the basis for negotiations. The minimum requirements must not be the subject of negotiation and there are controls on the conduct of the negotiations. It is permitted to reduce the number of tenders during the course of negotiations. Importantly, no negotiation is permitted after receipt of final tenders.

An interesting provision permits contracting authorities to reserve the right not to go through the negotiation process, by expressly saying so in the contract notice or invitation to confirm interest. This opens up the option for the contracting authority either to proceed with a negotiation process or to award the contract following evaluation of initial tenders, saving costs and time. This additional flexibility may be one of the reasons why a contracting authority opts to use this procedure.

Competitive Dialogue - minor changes only but some negotiation with the preferred bidder is permitted. Article 30/Regulation 30

The changes to the CD process are not so significant and most of the provisions and terminology will be familiar to contracting authorities who have used CD under the current rules. There are some subtle changes to some wording. For example, tenders received after close of dialogue may now be “clarified, specified and optimised” rather than “clarified, specified and fine-tuned”. In that context changes must now not be made to the “essential aspects of the tender” rather than the “basic features of the tender” as was previously the case.

Negotiations with the preferred bidder are allowed. Under the current rules it is permitted to “clarify aspects of the tender” or “confirm commitments” with the preferred bidder. The term “negotiation” is now used. Negotiation with the preferred bidder may be carried out to confirm financial commitments or other terms of the tender. This negotiation is permitted provided that it does not have the effect of materially modifying essential aspects of the tender.

This ability to negotiate with the preferred bidder distinguishes the CD process from CPN where no negotiation is permitted after receipt of final tenders.

Contracting authorities will need to think carefully about which of these similar, but different, procedures best meets their practical needs.