Competitive Dialogue: Improving procurement outcomes for you and the vendor

Sometimes procurement is just easy: you know what you want, what the market has and what it should cost. Everyone in your organisation agrees and will happily assist with the process.

Then there are the other times. A need is obvious but the exact definition remains steadfastly fluid; the market seems to have answers, but maybe it’s just marketing hype, and comparing costs raises just too many assumptions. No-one in your organisation is volunteering to assist and the risks look significant even before you’ve started.

Competitive Dialogue (CD) may help. CD isn’t a new procurement method, it’s really just an additional step in the usual process, and it is accepted across both public and private sectors.

It works like this. Once you have selected a shortlist of likely capable providers you enter into a formal dialogue individually with each of them where you actively review and develop your requirements and the associated solution(s). After the CD step, you move to the issuing of the RFT, the formal responses of which will be improved as both parties, you and the vendors, will have clearer expectations and understanding about what form the proposed solution will make  A properly undertaken CD increases the potential for an innovative, fit-for-purpose solution that can be implemented at lower risk and cost, with a vendor who is already engaged and trusted.

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CD has been around for well over a decade, although it hasn’t been widely used. While it isn’t difficult to implement the infrequency of use means most organisations don’t have the skills, experience or referable examples to adequately understand it and as a result make the decision not to use it based on over estimated risks and under estimated benefits. CDs are usually best for the more complex projects or those where the market is evolving quickly and more innovative goods and services are desired. The recent pace of advances in business related technology, such as cloud and as-a-service delivery, are some of the most fitting examples and areas where we now see increased use of CD. Conversely you are unlikely to realise any benefit from using CD in the procurement of commodity or mature market services.

To be successful you need to be honest, probably more honest than your stakeholders and project teams are traditionally comfortable with. Understand what you know and don’t know and get the confidence to ask harder questions both within your team and with potential providers; you will benefit. Most importantly this must be a two way discussion. You know your business and its requirements, they know their products and services. You are both trying to best align the two for mutual benefit. Vendors are usually willing participants as they know they will also benefit. Being able to have this targeted two way discussion with potential clients means they can much better define what they should/should not offer, the risks involved and ultimately the cost, without having to inflate costs for unknowns. It also allows them to more rapidly improve and develop their products and services in a more informed manner, with a more informed client.

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Of course organisations must retain and emphasise proper process, practices and probity during CDs, especially as staff involved internally may have additional onus on them compared to their ‘normal’ procurement practices. Vendor communication must be open and honest while retaining advertised schedules, intellectual property and confidentiality. Vendors trust and active participation will be lost of they feel the CDs are overly long, require significant design/input or appear to be aimed at gathering intelligence for a composite solution.

So think about the competitive dialogue option, do a little research, get a bit of specialist advice. Don’t let anyone rush procurement. Plan for it (…for any project), get the stakeholders enthused and aim for that better solution.