Competitive Dialogue during Procurement

We’ve come across some recurring problems during interventions in large systems programmes.  These programmes often run for years, are documentation-heavy and find it difficult to deliver to time, or indeed, at all. Often, attempts to (re-)start delivery of products with business value are limited by existing contractual terms. Sadly, there is often no customer appetite to change these.

An obvious approach is to try and forestall these limitations at the start of programmes by applying lessons learnt during procurement, where contractual terms are being agreed with suppliers. This is the opportunity to put in into place some terms that allow frequent business delivery, perhaps using a more flexible contract approach. There are still some drawbacks, however. For large, complex systems, there is still a considerable amount of up-front, pre-contract work required, in order to determine the scope of the system in enough detail for the supplier to be able to quote a cost that that sits happily with their appetite for risk. Although techniques such as Evolutionary Acquisition can help here, tension still remains often between the customer and the supplier. There are other issues, too. The customer is unlikely to know the supplier marketplace well enough to specify requirements that deliver the best solution available, leading to a solution that may not be the best value for money for stakeholders.

These issues led me to think whether there was a way to conduct the whole procurement process in an iterative way. It turns out that there is – a procurement technique called Competitive Dialogue. This is a European Union procurement directive that has been adopted by the UK’s Office of Government Commerce as recommended best practice for the procurement of complex systems.

Key points of Competitive Dialogue:

  • allows the customer to engage with multiple prospective suppliers to establish the best potential solution before the contract is signed;
  • both requirements and contractual terms are iterated together though a series of face-to-face dialogue meetings with a number of prospective suppliers;
  • allows prospective suppliers to understand the customer’s business needs in more detail and the chance to offer optimal solutions that the customer may not have thought of, which in turn will influence the customer’s requirements.

It’s important to note that using Competitive Dialogue in itself does not guarantee agile-friendly terms in a contact, as such terms would have to be negotiated and agreed irrespective of how the negotiation is structured.  A good synergistic delivery method for even the most complex systems programmes would be Boehm’s modified spiral model, also known as the Incremental Commitment Model.

There are some issues with Competitive Dialogue, though. The process can seem extended and time-consuming, especially from the suppliers’ point of view. Those who are unsuccessful will have a large marketing cost that cannot be recouped. For this reason, Competitive Dialogue is best suited for those large, complex systems that may have multiple successful bidders (for different parts of the system) or offer opportunities for suppliers to form consortia.