Not every public contract can be awarded on the basis of specifications that fix everything in advance. For complex needs, innovative solutions or situations where the market knows better than the authority what is possible, the special procedures come into play. These procedures share one characteristic: there is room for interaction between authority and tenderer before the final offer.
In this article we discuss the three special procedures: the competitive procedure with negotiation, the competitive dialogue and the innovation partnership.
Competitive procedure with negotiation
This is the most commonly used special procedure. The authority selects candidates, requests an initial tender, and then conducts negotiation rounds to improve the tenders — on technical, qualitative or financial aspects.
When is it permitted?
The authority may only use this procedure if at least one of the following conditions is met (Article 38 of the Act of 17 June 2016):
- The needs cannot be met without adaptation of readily available solutions.
- The contract includes design or innovative solutions.
- The contract cannot be awarded without prior negotiations due to its nature, complexity, legal or financial structure, or the risks involved.
- The technical specifications cannot be established with sufficient precision.
- A prior open or restricted procedure has yielded only irregular or unacceptable tenders.
The process
Phase 1: Selection. The authority publishes a notice and selects candidates based on selection criteria. The minimum number of selected candidates is three (unless insufficient suitable candidates).
Phase 2: Initial tender. Selected candidates receive the specifications and submit an initial tender. This tender forms the basis for negotiations.
Phase 3: Negotiations. The authority conducts negotiation rounds with the tenderers. The specifications define the minimum requirements and the award criteria — these are not negotiated. Everything else (technical approach, planning, price, terms) can be discussed.
Phase 4: Final tender (BAFO). After negotiations, the authority requests a Best and Final Offer (BAFO). This is assessed on the basis of the award criteria.
Rules of the game
- The authority may not share confidential information from one tenderer with another.
- The authority may not change the minimum requirements and award criteria during negotiations.
- The authority may progressively reduce the number of tenderers (funnelling), provided the specifications foresee this and the criteria are predetermined.
- All remaining tenderers are invited simultaneously for each phase.
Competitive dialogue
The competitive dialogue goes a step further. Here the authority does not know exactly which solution it needs and enters into discussions with participants to jointly develop solutions.
When is it permitted?
The same conditions as for the competitive procedure with negotiation, but the dialogue is particularly suited for complex contracts where the authority is unable to establish technical specifications or contractual terms.
Typical applications: major ICT transformations, public-private partnerships, complex infrastructure projects, energy performance contracts.
The process
Phase 1: Selection. Identical to the competitive procedure.
Phase 2: Dialogue rounds. The authority discusses all aspects of the contract with the selected participants: technical solutions, legal structure, financing model, risk allocation. Multiple dialogue rounds may take place.
Phase 3: Closure of the dialogue. Once the authority has identified one or more solutions that meet its needs, it closes the dialogue and invites the remaining participants to submit a final tender.
Phase 4: Assessment. Tenders are assessed on the basis of the award criteria stated in the notice or the descriptive document.
Difference with negotiation
In the competitive procedure with negotiation, the authority already has specifications with concrete requirements — the negotiation refines the tenders. In the dialogue, the starting point is a needs description and participants contribute to designing the solution.
Innovation partnership
The innovation partnership is the newest and least used procedure. It combines an R&D phase with the purchase of the result.
When is it permitted?
When the authority needs an innovative solution that is not available on the market. This is not about a minor adjustment to an existing product, but genuine innovation — a new product, service or process.
The process
Phase 1: Selection. Selection based on research and development capacity, not just execution experience.
Phase 2: Negotiations. Negotiations on the R&D approach, phasing, intellectual property and conditions for subsequent purchase.
Phase 3: Partnership. The selected partner(s) develop the innovation in phases. After each phase, the authority can terminate the partnership if results are insufficient.
Phase 4: Purchase. If the innovation is successful, the authority purchases the result without a new procedure — provided the contract stays within the pre-established maximum value.
Intellectual property
A crucial point: the partnership must clearly regulate IP rights. Who owns the result? May the partner offer it to other customers? Does the authority have exclusivity? These questions must be answered when concluding the partnership.
Strategic tips for tenderers
Invest in preparation. With these procedures, the tender effort is greater than for an open procedure. Dialogue rounds and negotiations require management time, presentations and iterations. Weigh this investment in your bid/no-bid decision.
Listen more than you talk. The dialogue and negotiation rounds are also a source of information. Understand what the authority truly needs — this sometimes lies not in the specifications but in the questions it asks.
Protect your intellectual property. In dialogues you share ideas. Mark confidential elements and explicitly reference your IP. The authority may not share your solution with other participants, but the risk exists that elements filter through into the final specifications.
Prepare for iterations. The first tender is rarely the final one. Plan internal capacity for two or three successive tender versions.
Understand the rules. Read the specifications carefully regarding funnelling: may the authority reduce the number of participants? If so, on what criteria? This influences your strategy per round.