The public contracts regulations for 2006, which have just come into force, introduce a competitive dialogue procedure to clarify issues in complex contracts

The Public Contracts Regulations 2006 came into force last month, just days before the deadline for implementing the corresponding European Union directive, which overhauls the procurement rules for public bodies. Previously, the rules relating to works, services and supplies were set out in separate regulations, and there were a number of inconsistencies. The commission's aim was to simplify the legal framework for public procurement and adapt it to the electronic age.

Among the changes are new rules on using framework agreements and e-procurement, but of particular interest is the introduction of a competitive dialogue procedure designed for "particularly complex contracts".

The definition of a particularly complex contract is not entirely clear. It arises when the contracting authority is not able "objectively" to define the technical means to satisfy its needs or objectives, or to specify the legal and or financial make-up of the project. The European commission and guidance published by the Office of Government Commerce suggest that this procedure may be particularly appropriate for PFI and PPP projects.

The aim of the competitive dialogue is to allow the contracting authority to work out how best to satisfy its needs. Unlike other EU tendering procedures, namely open and restricted, the contracting authority is able to discuss all aspects of the contract and proposed solutions with the participants, as long as it does not discriminate.

The procedure is a useful tool for contracting authorities and should help to avoid covert discussions. However, participants will need to assess the risk of putting solutions on the table and seeing them used by others, or protecting them but losing out on the contract.

So what should you look for in the contract notice? Well, it may say that the dialogue will take place in successive stages to reduce the number of prospective solutions and bidders. It may state the minimum - not less than three - and maximum number of participants and the criteria it will apply. At this stage you need to consider what the minimum qualifications are and whether you satisfy them.

If you ask to participate and are selected by the contracting authority, you will be sent an invitation. This will identify when the dialogue will start and the information to be included in the reply. If it was not included in the contract notice, the invitation will set out the weighting of the award criteria. This will give you an idea of how to pitch your bid, so read it carefully.

You are able to request further information as long as the contracting authority can supply it not less than six days before the date specified for final receipt of tenders. The date for final receipt of tenders does not occur until after the dialogue is concluded. However, as the contracting authority decides when to conclude the dialogue, it would be sensible to request further information as soon as possible.

The contracting authority cannot reveal solutions proposed or confidential information without a participant's consent. Given that you will be discussing your ideas and know-how before the contract is awarded, you will need to consider whether you do want to give your consent … You want to be helpful but it would be galling if a rival won the contract because it presented better value on your proposal.

If the contract notice allows it, participants can be cast aside until the contracting authority can identify one or more solutions that meet its needs. At this stage it declares the dialogue concluded and requests final tenders. Once your tender is submitted the contracting authority can only request that participants clarify and fine tune their tenders. You cannot amend the tender beyond this if it would distort competition. So it is important that you take the opportunity to work out what is required during the dialogue.

The tenders received are then assessed on the basis of the award criteria and the contract awarded to the participant submitting the most economically advantageous tender.

Given the time and money contractors invest in tendering, bid costs are likely to remain an issue. Businesses will wish to see realistic numbers of participants and a real chance of winning work before responding to an invitation.