When it comes to public procurement, one of the most crucial decisions a contracting authority faces is selecting the right procedure to ensure value for money. Two popular procedures outlined in Directive 2014/24/EU are Competitive Dialogue (CD) and the Competitive Procedure with Negotiation (CPN). Despite their similarities, understanding the subtle differences between these procedures is key to ensuring an effective procurement process.
Legal Justification: No Difference But Record It
Both CD and CPN share the same legal justification under Art. 26(4) of Directive 2014/24/EU, meaning that a contracting authority must justify and record the use of either process. Recitals 42, 43, and 44 offer further guidance but are not exhaustive, allowing flexibility depending on the complexity or market-specific challenges of a procurement project.
More specifically, recital 44 refers to the use of the CPN, where an open or restricted procedure leads to only irregular or unacceptable tenders, though in Art. 26(4)(b) it is clear that this can also be used as a justification for CD.
Additionally, recital 45 refers to CPN and the need for the documentation of all stages to ensure transparency and traceability of the process though, as is clear from Art. 84(2), this is required for all procedures.
This means that there needs to be a justification for the choice between CD and CPN as part of the need to record and justify all decisions in the course of a procurement (Art. 84(2), Directive 2014/24/EU).
A similar provision (Art.100(2)) is included in Directive 2014/25/EU. This means that though Art. 44, Directive 2014/25/EU permits the use of CD or the Negotiated Procedure with Prior Call for Competition without mentioning specific grounds for legal justification, it is still necessary to record and justify the choice of CD or the Negotiated Procedure with Prior Call for Competition.
What’s the Difference in Procedure? Not Much
The conduct of the procedure involves detailed planning and preparation before launch – including an understanding of needs and how they might be met – and the award basis, which in practice will always be best price–quality ratio (though this is not specified in CPN). As well as this, the nature of the meetings with candidates (whether they are called dialogue or negotiation), and the form of responses to be received from candidates before final tenders are called (or interim submissions) must be appreciated. In CD, or initial/other pre-final tenders in CPN, the justification for any changes to the original draft contract specification or conditions should in practice be no different between CD and CPN. This is in line with the debriefing required by Art. 55(2)(d) for ‘any tenderer that has made an admissible tender of the conduct and progress of negotiations and dialogue with tenderers’.
In fact, when it comes to the actual running of the procedures, the lines between CD and CPN blur. Both demand thorough planning and preparation, a clear understanding of the authority’s needs, and the goal of securing the best price–quality ratio. Whether engaging with candidates through ‘dialogue’ (in CD) or ‘negotiation’ (in CPN), the process of meeting and refining proposals remains similar.
In practice, both procedures also require authorities to be transparent and careful when making any adjustments to the original specifications. The Directive emphasises that changes should not distort competition or discriminate against any party, which includes those who might have expressed an interest in the contract had they been aware of the adjustments.
Flexibility: A Key Differentiator In Choosing Between CD and CPN?
When it comes to choosing between CD and CPN, it’s easy to assume that CD offers more flexibility. However, both procedures demand significant time, effort, and expertise to manage effectively, making the decision more nuanced than just flexibility. The key to making the right choice lies in understanding the unique requirements of your project.
One often-discussed distinction is the level of flexibility permitted after final tenders are submitted.
In CPN, as with open or restricted procedures, no further negotiation is allowed once final tenders have been received (see Art. 29(7), Directive 2014/24/EU).
In CD there is the possibility, at the request of the contracting authority, to ‘clarify, specify, and optimise’ final tenders subject to the limits of Art. 30(6) (relating to not distorting competition or having a discriminatory effect). There is also the possibility – within the limits of Art. 30(7) – of negotiations with the winning tenderer, again at the request of the contracting authority. The wording is: ‘[to] confirm financial commitments or other terms contained in the tender by finalising the terms of the contract provided this does 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.’
The scope of the flexibility in Art. 30(6) and Art. 30(7) is however clearly intended to be limited. The flexibility in Art. 30(7) was introduced mainly to facilitate the possible need for change for privately financed projects in the period between the winning tender being selected and financial close based on changes in market conditions (e.g. interest rate changes) in this period. It is desirable that financiers are part of the discussions in the dialogue phase, though this often does not happen. They are often only engaged when the winning bidder has been selected, thus creating pressures to change the contract terms to suit the needs of financiers.
Other Factors To Consider When Choosing Between CD and CPN
The scope of the dialogue/negotiation should not be a reason for choice between CD and CPN – from the contracting authority’s perspective, either procedure should relate to issues which were the basis for the initial justification of the procedure.
In CD, ‘all aspects of the procurement with the chosen participants can be discussed during this dialogue’. In CPN the minimum requirements and award criteria may not be the subject of negotiations. However, in practice even in CD the contracting authority should not discuss the minimum requirements and award criteria. In CD it is permitted (Art. 30(8)) to ‘specify prizes or payments to the participants in the dialogue’. This is not mentioned for CPN in Art. 29, which means that it is neither explicitly forbidden nor permitted. However, the case in either procedure for making such payments by the contracting authority needs to be justified (for example to auditors) in terms of benefit to the contracting authority. This might be the case where the candidate proposes a solution which requires testing before acceptance by the contracting authority.
Learning from Experience
Interestingly, the choice between CD and CPN often varies by country within the EU, influenced by historical precedents and localised expertise. Contracting authorities are encouraged to consider their own past experiences or learn from the practices of their peers in similar markets. The authority’s familiarity with one process over another can be an important factor in making the right choice.
Conclusion
In summary, while Directive 2014/24/EU offers both CD and CPN as viable options for complex procurement, the decision ultimately rests on the contracting authority’s ability to justify its choice. Both procedures demand a high level of diligence and expertise, and in practice, the differences in implementation are marginal. What’s more important is ensuring that whichever procedure is chosen is executed effectively and transparently, securing the best possible outcome for the public sector.
By carefully evaluating the specific needs of the project and documenting every decision, contracting authorities can ensure they choose the most appropriate and effective procedure for their procurement journey.
The views expressed in this blog are those of the authors and not necessarily those of EIPA.
More about Competitive Dialogue and Negotiated Procedures
If you are interested in learning more about Competitive Dialogue and Negotiated Procedures, have a look at our upcoming course below: