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Information and Communications Technology Competitive DialogueAn innovative, flexible procurement approach to achieve success
BackgroundEstablished in 2004 in France and in 2006 in the United Kingdom, Competitive Dialogue originated in the European Union (EU) in response to existing
technically and legally. As such, new legislation was introduced to permit discussion of different options with vendors before choosing a particular solution. Locally, Competitive Dialogue is typically used for complex contracts where technical solutions are
solution is sought. Competitive Dialogue can be used across both public and private sectors for large scale IT and IS procurements.
Many organisations continue to use outdated Information and Communications
purely on the vendor’s paper based response. Vendors are increasingly underestimating total contract price and providing compliant responses to mandatory requirements in tenders. This is despite knowing they are unable to fully deliver the client outcome in order to be seen as the dominant market leader amongst competing vendors.
Without an established ICT procurement framework to engage the vendor market to test pricing and validate the value propositions of different companies, organisations are exposed to increased risk of awarding contracts to vendors that may not
support the clients business strategy and realise the intended
contract awarding rather than having a strong client outcome focus.
as a procurement tactic, or unintentionally due to a lack of understanding of the scope and requirements. This results in ongoing project change requests from the vendor for scope and timeframe blowouts leaving very little choice for clients but to accept these variances with the hope of achieving a partial or fully delivered outcome. Clients are often locked into 5 or 10 year contracts with strained relationships following contract signing.
A fundamental assumption underpins ICT strategic
EY sourcing expertise can help your organisation by incorporating Competitive Dialogue into your existing ICT procurement framework to achieve strong competitive tension between potential vendors, reduce risks and assumptions from the vendors. Competitive Dialogue helps the client and vendor to discuss contract departures and quickly gauge the vendors
pricing with a variance cap and promotion of innovative solutions with shorter delivery timeframes, whilst maintaining
The structured dialogue provides clients with the opportunity to collaborate in facilitated small group sessions, with the vendor to drill down on the solution being put forward and question the design or functionality of the solution being proposed. It helps the vendor to clarify their assumptions and they are offered the
greater understanding of the client’s requirement during the Competitive Dialogue small group sessions whilst maintaining probity adherence at all times throughout the Competitive Dialogue process.
within an ICT economy•
vendor response, delivered in small group sessions
• Increased vendor evaluation cycles prior to vendor appointment
• A contract that helps clients to review and/or terminate at various points within the contract term
• Assessment of the vendor relationship sustainability prior to contract signing
• Lasting partnerships built on a mutual understanding of culture, values, client’s business strategy and imperatives from the relationship
• skills, capacity and team structure are available for the duration of the contract
2 | Information and Communications Technology Competitive Dialogue
Following ICT Competitive Dialogue client and vendor sessions, reference checks are conducted, vendors are requested to provide a small scale preliminary proof of solution (generally at their expense) prior to being invited to submit their best
of the contract.
EY has a core strategic sourcing team in Australia with Competitive Dialogue experience and deep industry knowledge. Many of our team members have experience, both from the client side and vendor side, providing a unique perspective to drive successful client outcomes and intuitively identify weaknesses or gaps in proposed solutions. We assist clients with commercial coaching to achieve competitive tension and a contract that
and agreed service level outcomes, as well as key measures that encourage the vendor to remain responsive and innovative over the term of the contract.
EY can tailor a Competitive Dialogue approach to complement your organisation’s individual ICT procurement needs having delivered these services to clients in the Government sector as well as other industries, such as Utilities,
procurement approach? Consider ICT Competitive
promoting collaboration and transparency with
independently facilitated and commercially negotiate the best outcome for both parties.
• Closing phase includes reference checks, small scale
contract award.
• The DialogueDialogue training (as many vendors have not experiencedCompetitive Dialogue), and execution of the structured CompetitiveDialogue facilitated technical and commercial sessions aligned toCompetitive Dialogue timetable and session content.
• The Planning phase involves the development of the ICTprocurement principles and commercial strategy. Early marketengagement, tender development, including pricing model andcommercial contract planning, evaluation planning, engagementwith a probity advisory (subject to client requirements),development of Competitive Dialogue technical and commercialsession content.
3Information and Communications Technology Competitive Dialogue |
The three phases of ICT Competitive DialoguePh
ase
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Phas
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Phas
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Clos
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This communication provides general information which is current at the time of production. The information contained in this communication does not constitute advice and should not be relied on as such. Professional advice should be sought prior to any action being taken in reliance on any of the information. Ernst & Young disclaims all responsibility and liability (including, without limitation, for any direct or indirect or consequential costs, loss or damage or loss of profits) arising from anything done or omitted to be done by any party in reliance, whether wholly or partially, on any of the information. Any party that relies on the information does so at its own risk. Liability limited by a scheme approved under Professional Standards Legislation.
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For more information on how EY can assist your organisation’s procurement needs, contact:
Alison CairnsAdvisory Partner, Ernst & Young Australia
M: 0414 479 400 [email protected]
Michelle WilliamsSenior Manager Advisory, Ernst & Young Australia
M: 0409 484 753 [email protected]
Case StudyRecently, EY delivered Competitive Dialogue (CD) for
William Street’. CD was used to procure infrastructure-as-a-service (IaaS) for the building as part of an outcome based procurement approach. The billion-dollar construction project will see the whole building
ministers, and their staff. Using an outcome based procurement approach, CD provided the open dialogue
designed to reduce risks and assumptions from the vendor/s providing competitive pricing whilst maintaining competitive tension between the shortlisted vendors.
CD provided additional evaluation rigour across all three stages to help the State to assess the vendors based on the structured dialogue sessions, through commercial negotiations and a small scale preliminary proof of solution. CD also provided the State with the opportunity to understand the vendors’ corporate culture and team cohesiveness. During both the
name basis is formed between the client and vendor.
EY delivered the planning, dialogue and closing phases for both the technical and commercial streams of this project.
