Contracts

New government guidance aimed at cutting procurement costs on complex projects that use the Competitive Dialogue Procedure (CDP) has been introduced this week.

The guidance, published by the Office of Government Commerce and the Treasury, was prompted by industry concerns that CDP, introduced under new EU procurement rules in 2006, is driving up bids costs on major projects.

Some contractors claim costs have risen by 40% on some projects since its introduction.

CDP requires bidders to work up much more detailed bids before a preferred bidder is chosen and strictly limits further negotiation once a preferred bidder is chosen.

The guidance was developed after extensive discussions with contractors, contracting authorities, funders and lawyers with CDP experience.

Issues covered in the guidance include the protection of intellectual property and the scope for discussion once dialogue has formally closed.

The CBI welcomed the new guidance. Last month the CBI called on the NAO to investigate the impact of CDP on the rising bid costs of major projects in the UK.

CBI's Head of Public Procurement James Fothergill commented:

CBI members have raised concerns that the process is proving challenging for procur­ers and suppliers alike."

"That is why this Treasury/OGC guidance is welcome as it recognises several areas of concern and provides advice to help ensure procurers publish well-prepared bids, and sensitively handle commercially confidential issues during dialogue."