The competitive dialogue – building the solution together with the buyer
The competitive dialogue under sections 35 and 36 of the Public Procurement Act is reserved for the most complex and demanding public procurements. It is typically used where the contracting authority has a clear need or business problem but cannot define in advance what technical, financial or legal solutions would best meet that need.
Although the name resembles the ordinary negotiated procedure, the logic is different. In the negotiated procedure the buyer largely knows what it wants, and the negotiations refine the details of delivery. In a competitive dialogue, by contrast, the buyer and the selected bidders hold an in-depth dialogue to find and define the solution itself before any actual bids are submitted. This makes the procedure especially common in large, organisation-wide software renewals and demanding IT integrations.
1. How does the process proceed?
A competitive dialogue is a long, iterative process divided into four main stages:
- Request to participate and selection of candidates: The contracting authority publishes a contract notice and a supplementary descriptive document setting out the objectives and needs of the procurement. Companies submit their requests to participate. The authority assesses the applicants' suitability and selects the candidates who proceed (in EU procurements the law requires at least three candidates as a rule).
- The dialogue stage: The contracting authority opens a dialogue with the selected candidates. The purpose of this stage is to explore the alternatives and find the solutions that best meet the buyer's needs. The dialogue may run over several successive rounds, during which the solution models are refined.
- Closing the dialogue and the tender documents: Once the authority has been able to identify, on the basis of the dialogue, the solution or solutions that meet its needs, it closes the dialogue. The buyer then draws up the final tender documents based on the technical or commercial terms defined during the dialogue.
- Final bids and selection: The remaining bidders submit their final bids on the basis of the tender documents. At this stage no substantial changes are made to the content or terms of the bids. The winner is always chosen on the best price-quality ratio.
2. Key points for the bidder
From a bidding company's perspective, a competitive dialogue is an exceptional chance to act in a genuine expert role. Taking part nevertheless calls for strategic judgement:
- Managing resources: The dialogue stage is often long and ties up a significant amount of the company's specialists' time — solution architects or service designers, for example. A bidder must be able to allocate enough resources to months of problem-solving before any price bid has even been submitted.
- Solution selling matters most: Because the buyer has not locked in the technical solutions in advance, a bidder can bring the full breadth of its expertise to bear. A successful company helps the contracting authority understand why a particular architecture or way of delivering serves the whole best and makes the most sense over the life cycle.
- Protection of innovations and trade secrets: The law protects a bidder's rights during the dialogue. The contracting authority may not disclose confidential information or technological innovations presented by one bidder to the other participants without that bidder's explicit consent. You can therefore present the competitive advantages of your solution safely, without fear that they pass to a competitor as they are.
- The final bid is binding: Although the process is highly conversational at first, the final bid submitted after the dialogue closes is binding. It must correspond precisely to the requirements the buyer has locked in, and the prices and terms presented at that point are final.
The competitive dialogue is a heavy instrument, but for an expert organisation it is often the best possible form of tendering. It shifts the emphasis from price comparison alone to quality, problem-solving and genuine collaboration.
Frequently asked questions
How does a competitive dialogue differ from the ordinary negotiated procedure?
In the negotiated procedure the buyer largely knows what it wants and the negotiations refine the delivery. In a competitive dialogue (sections 35–36) the solution itself is sought and defined during the dialogue stage together with the bidders, before any actual bids.
When is a competitive dialogue used?
In the most complex procurements, where the buyer cannot define the solution in advance — typically in large organisation-wide software renewals and demanding IT integrations.
How is the winner chosen?
Always on the best price-quality ratio. The final bids are submitted against tender documents drawn up on the basis of the dialogue, and no substantial changes are made to them afterwards.