Value of procurement in competitive dialogue


At the stage of announcing competitive dialogue, the contracting authority need not have a functional and operational programme ready, but this does not stand in the way of commencing the procedure and specifying the value of the procurement.

The contracting authority will select a competitive dialogue procedure for a public procurement when the contract cannot be awarded under an open or restricted tender because, due to the particularly complex nature of the procurement, it cannot sufficiently identify the subject of the contract under Art. 30 and 31 of the Public Procurement Law or objectively define the legal or financial conditions for performance of the contract. In the latter case, the contracting authority is capable of describing the subject of the contract in technical terms but cannot address the financial or legal conditions which will affect the scope and performance of the contract, and thus the description would be incomplete. Price cannot be the sole criterion for evaluation of offers in a procurement procedure of this type.

Contracting authorities use competitive dialogue when the procurement is particularly complex. Essentially, the subject of the procurement should be described using technical and qualitative characteristics in compliance with Polish standards transposing European standards or standards of other member states of the European Economic Area transposing European standards (Public Procurement Law Art. 30). In the case of a design and build contract for construction work, the subject of the procurement is identified using a functional and operational programme (Art. 31(2)), in which the construction task is described by stating the intended use of the completed construction work and the technical, economic, architectural, material and functional requirements. In the case of procurements conducted using the competitive dialogue procedure, the rules indicated in Art. 30 and 31 of the act do not apply because of the particularly difficult or atypical nature of the procurement.

This means that even in the case of a procurement for construction work, when using the competitive dialogue procedure a document referred to as a functional and operational programme is not prepared at the stage of preparation of the proceeding. This is because at the stage of preparing the proceeding the contracting authority does not yet have enough knowledge to exhaustively describe the subject of the procurement. It is only during rounds of dialogue with prequalified contractors that the contracting authority will learn about the possible technological solutions and select the one that best meets its needs. Then the contracting authority will draw up the terms of reference or technical specifications containing a description of the construction task pursuant to Art. 31 of the act.

One of the circumstances justifying use of the competitive dialogue procedure is the inability to describe the subject of the procurement in the form of a functional and operational programme. The functional and operational programme contains detailed technical solutions for the given project. If the contracting authority has sufficient knowledge to precisely define its expectations for the procurement, it should follow another procedure. The essence of competitive dialogue is to review the proposals of the contractors invited to participate concerning the possible solutions that the contracting authority could apply.

In the case of typical contracts for construction works, the contract value is determined pursuant to Art. 33(1) of the Public Procurement Law on the basis of the investor’s cost estimate prepared at the stage of drafting the design documentation or on the basis of the planned costs of the construction work specified in the functional and operational programme (in “build” contracts), or on the basis of the planned costs of the design works and the planned costs of the construction works defined in the functional and operational programme (in “design and build” contract). The estimated value of the contract determined according to these guidelines is the result of precise mathematical calculations referring to strictly defined technological solutions. This method of estimating the contract value is impossible, however, when following the competitive dialogue procedure.

Before commencing each proceeding, the contracting authority must determine the value of the contract it plans to award, because it must secure an adequate budget for the project, as well as select the proper procedure and announce the contract in the appropriate publication. This is vital, because improper choice of the publication means that under Art. 146(1)(2) of the act the contract awarded in the proceeding may be invalidated.

When estimating the value of the contract in competitive dialogue, the contracting authority must proceed without the information contained in the documents typically drafted at the stage of preparing the proceeding for construction works. But this does not release the contracting authority from the obligation to act prudently in defining the value of the contract. In determining the value, the contracting authority should rely on all information available to it at this stage and make a conservative, averaged estimate, reflecting the realistic expectations.

As in other procedures, in competitive dialogue as well the contracting authority must determine the estimated value of the contract in the proper manner. While in this procedure the contracting authority does not have valuation instruments at its disposal enabling it to precisely determine this value, it should nonetheless take into consideration all factors within the range of its inquiry and data enabling proper determination of the value of the contractor’s anticipated fee.

As the National Appeal Chamber held in its ruling of 20 June 2012 (KIO 1157/12), “Determination of the estimated value of the contract occurs prior to commencement of the proceeding and is used to select the regime which should be applied in the proceeding for award of the public contract. It cannot be accepted that a change in circumstances at this stage requires the contracting authority to change the estimated value. This follows not only from Art. 35 (1) and (2) of the Public Procurement Law, but also from the role played by the estimate of the contract value.” When estimating the contract value for purposes of selection of the procedure (above or below the EU thresholds), the contracting authority should rely on the data it has at its disposal at the stage of preparing the procedure. The amount determined in this manner then serves as the basis for determining the procedure to follow.

It should also be pointed out that at the stage of defining the value of the contract, the contracting authority will most often not obtain one specific value as a result of arithmetical operations, but a certain range of expected prices. The contracting authority is required to fairly assess how the realistic averaged price will fall within the range it has established, and select the procedure that follows from its estimates. If the range of contract values places the contract both above and below the EU thresholds, the contracting authority should decide which value is the realistic market average. In the case of doubts, it should apply the more rigorous procedure, accepting that the contract value exceeds the threshold. This rule applies also to preparing a proceeding to be conducted in a competitive dialogue. However, in practice, to better depict the contracting authorities’ estimates, in this procedure they often provide in the announcement a range for the contract value.

Anna Prigan, legal adviser, Infrastructure & Transport and Public Procurement & PPP practices, Wardyński & Partners