Competitive dialogue… myth busting

Much has been made of NHS procurement but it remains an enabler to achieve excellence, value for money, and improvement for commissioned services, particularly using creative approaches.  Attain’s Commercial team have considerable experience in leading Competitive Dialogue procurement processes on behalf of customers across health and social care.

Maninder Singh Dulku, Associate Director Commercial Team, Attain, provides some key insights on the positive application of Competitive Dialogue.

What is Competitive Dialogue?

Competitive Dialogue is a formal procurement procedure which is subject to the Public Contracts Regulations 2015. It allows a buying organisation to enter into dialogue (negotiation) with multiple bidders, following a contract notice and a selection process, to develop one or more suitable solutions for its requirements and to determine which chosen bidders will be invited to tender.  It ends in a final competitive tender from the shortlisted bidders, followed by a contract award to a winning bidder.

The process of Competitive Dialogue enables the buying organisation and market to bring together their knowledge and expertise to develop solutions to deliver specific outcomes. When compared to a fixed tender approach the iterative two-way dialogue (between buying organisation and provider(s)) allows for greater co-production, scrutiny and commitment.

 

When should it be used?

The Competitive Dialogue procedure is flexible and suitable where there is a need for the buying organisation to discuss aspects of the proposed solution with bidders. Its use is limited to ‘particularly complex’ contracts, where the buying organisation cannot define clearly in advance the technical means capable of satisfying their needs or objectives, or where it is unable to specify legal or financial make-up, and is seeking market innovation.

 

How does it work? What steps are involved?

A Competitive Dialogue can be broadly divided into four stages:

  • Pre-qualification stage – an assessment of bidders to ensure there is sufficient capacity and capability to deliver the service. Output – list of qualified providers to go to the next stage.
  • Invitation to participate in dialogue stage – first round of ‘dialogue’ meetings (focus on outline solutions) with qualified providers with the use of award criteria to progressively reduce the number of bidders. Outline tenders are submitted and evaluated. Output – shortlist of bidders with one or more suitable alternative solutions capable of meeting the buying organisations requirements.
  • Invitation to continue dialogue stage – further dialogue with shortlisted bidders with focus on detailed solutions.
  • Final tender submissions evaluated using award criteria. Output – selection of preferred bidder for contract award. Followed by a standstill period, clarifications (NOT re-negotiation) and signature of contract.

There are many myths that exist around Competitive Dialogue. Here are some of our views on those myths…

Myth #1 – Competitive Dialogue is a slow and cumbersome process

When speaking to many procurement professionals who have not led Competitive Dialogue procurements their initial reaction is that it can take years, which can be the case in the likes of the construction industry. It is, of course, important to prepare a project plan for the procurement process. Ensuring that the procurement is sufficiently resourced requires early, detailed and rigorous planning. A good timetable should be challenging, but above all else, realistic. It should account for periods of leave for key members of the team, and periods when traditionally fewer people are available.

The flexibility afforded by the Public Contract Regulations 2015 in not prescribing the steps to be taken when using Competitive Dialogue beyond a broad structure, offer buying organisations the chance to be smart and efficient in operating a tailored process. The procurement approach for different projects may vary provided that efficiency is the common denominator. The buying organisation should be clear in its approach to dialogue and its position on issues discussed at dialogue sessions. The use of position papers and pre-submission mark-ups can help in this regard.

Some tips for ensuring an effective, time bound process are:

  • Set the timetable – and stick to it
  • Create a resource plan for the procurement and identify key members early
  • Publish a contract notice in both OJEU (European) and Contracts Finder (National) to attract a sufficient number of bidders

Greater Huddersfield Clinical Commissioning Group and North Kirklees Clinical Commissioning Group implemented a £285m ‘prime provider’ contract (7 year term) for the delivery of the Care Closer to Home (Community Services), by undertaking a Competitive Dialogue approach with Lots. This process was launched in October 2014 and a preferred provider was appointed in May 2015 proving that this process can be delivered at pace.

Myth #2 – Isn’t dialogue just about negotiating the price

The dialogue stage is the key part of this process and allows discussions to take place in a competitive environment – it is the most intensive and resource heavy stage. Dialogue can be wide and far reaching; as an example, it is not uncommon to see a process that includes outline solutions, detailed solutions, refined solutions and then final tenders, each with evaluation and down-selection.  Not all of these steps are necessary for all competitive dialogues. Do not be afraid to run a shorter, more focused dialogue.

In our experience having sufficient time to have two-way conversations with the bidder around aspects such as, the service model and operational delivery, clinical quality standards, performance management (including outcomes measures), estates and finance and contracting is imperative. It is essential that the both parties have their subject matter experts throughout relevant stages of dialogue.  There can be a danger that this can turn into a question and answer session but it should be much more than that – an open approach to co-producing a solution. It is also worth appointing a member of the team to attend all of the dialogue sessions to be the ‘golden thread’ to ensure all aspects are considered, key actions points and notes are captured, and there are no conflicting messages given to the bidders.

It is important to consider the time needed to turn around matters between dialogue meetings – particularly if decisions are required from senior officers. It is equally important to give due regard to the time required by bidders to work up proposals, and to assimilate and act in accordance with the outcome of dialogue – rushing from one dialogue session to the next pays lip service to the process and wastes both parties’ time and money. Unless dialogue results in changes on one or both sides of the table, it will be a waste of time.

Other areas to look out for:

  • During dialogue, ensure equality of treatment among all bidders and do not provide information in a discriminatory manner which may give some bidders an advantage over others
  • Do not reveal to the other bidders solutions proposed or other confidential information communicated by a bidder participating in the dialogue without their agreement
  • Dialogues may take place in successive stages in order to reduce the number of solutions to be discussed by applying the award criteria stipulated, (indicate whether you wish to reduce number of participants at each stage)
  • Do not  invite a bidder that has performed poorly at outline solution stage to proceed to detailed solution stage simply to ‘make up the numbers’
  • The Public Contract Regulation 2015 state that dialogue may continue until solutions capable of meeting the buying organisation’s needs can be identified.

Bedfordshire Clinical Commissioning Group issued a tender for £288m – co-commissioned with two Bedfordshire Councils – for the delivery of integrated Mental Health Services in order to improve quality, health outcomes, increase capacity and reduce provision gaps, by undertaking a Competitive Dialogue process. Bidders were invited to meet with key subject matter experts from the CCG to mutually explore proposed service solutions at some depth and consider the strengths and weaknesses. Dialogue meetings were structured into discrete sessions including a focus on service specification development, estates, IM&T, IG, workforce, commercial offer, contract and mobilisation.

Myth #3 – The market doesn’t understand Competitive Dialogue

Buying organisations should not automatically assume that the market understands Competitive Dialogue; in our experience many organisations have not participated in a process like this. A market engagement event prior to the formal procurement launch is a good means of engagement, to ‘sight’ the market, gauge interest, facilitate supply chain partnerships, and to encourage interest by explaining the process. Some top tips for success are outlined below:

  • Ensure you carry out sufficient market research prior to procurement launch (this may include issuing a Request for Information)
  • Define your needs and requirements in the contract notice and in the procurement documentation
  • Provide the market with a greater understanding of how the Competitive Dialogue process will work and the procurement rules
  • Ensure all potential bidders are given an equal opportunity to fully understand the requirements of the procurement
  • Ensure data room/portal for all procurement documentation – to enable equal access by all bidders
  • Care should be taken to ensure that any statements made are consistent with information previously provided (such as in the notice)
  • Ensure that a member of the buying organisation makes a record of all information provided at the event (including any questions asked, the answers given and who gave them to enable any further clarification later). This information should then be published along with any other clarification questions asked/answered
  • Inform all potential bidders of the procurement principles and timescales
  • Market Engagement events should not be used to discuss or test the attendees’ proposed solutions

NHS Luton Clinical Commissioning Group had a desire to integrate services and improve quality for their Mental Health & Intermediate Care Services. The CCG conducted a significant market engagement exercise prior to the launch of the procurement. Bidders were able to articulate numerous examples of significant service innovation and best practice being delivered elsewhere. Positive feedback from a number of providers were given regarding iterative ongoing two way commissioner – provider dialogue as being preferable means to explore inventive solutions when compared to a fixed tender approach. The CCG concluded that it was not appropriate to embark upon a traditional fixed, competitive tender for the following reasons:

  • Whilst the CCG had their key outcomes specified, they did not know exactly the solution or its exact cost (whether it’s affordable)
  • The CCG wished to formally explore the trade-off between increased services, costs and outcomes
  • The CCG needed to actively interact with providers in order to fully understand exactly how much the various provider integration solutions could unlock, in terms of patient outcomes and financially

Competitive Dialogue was adopted to appoint the most capable providers. Outputs: £320m contract successfully let for seven year period.

Myth #4 – The Public Contract Regulations 2015 are too unwieldy and afford no flexibility

The new Light Touch Rules (for which health and social care services fall within) are designed to give flexibility to buying organisations, and so do not lay down detailed procedural rules, such as reduced process burdens on buying organisations and bidders. Following the initial OJEU advertisement, there is significant flexibility to decide how to get to the contract award stage, so the Competitive Dialogue can be streamlined. Though some of the basics of any well run procurement exercise would of course need to be respected, including making sure the process ensures transparency and equal treatment of bidders.

If you would like more information on our commercial services please contact Chris Walker, Director and Lead for the Attain Commercial Team