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TABLE OF CONTENTS

TABLE OF CONTENTS................................................................................................1
5-1:

COMPETITIVE DIALOGUE............................................................2

1.

WHAT IS THE COMPETITIVE DIALOGUE?............................................................

2.

WHEN IS THE COMPETITIVE DIALOGUE APPLIED?..............................................

3.

4.

2.1

Technical complexity................................................................................

2.2

Legal or financial complexity....................................................................

2.3

The award criterion in the competitive dialogue.......................................

HOW IS THE COMPETITIVE DIALOGUE CONDUCTED?..........................................


3.1

Publication of the contract notice...........................................................

3.2

Release of the tender documents to the interested economic


operators.................................................................................................

3.3

Selection of suitable economic operators for the competitive


dialogue.................................................................................................

3.4

Verification of the suitability of participants...............................................

3.5

Gradual reduction of the number of participants.......................................

3.6

Minimum number of suitable candidates (economic operators) for


inviting requests to participate in the competitive dialogue......................

3.7

Conduct of the competitive dialogue......................................................

3.8

Confidentiality in the competitive dialogue...............................................

3.9

Gradual reduction of the number or economic operators in the


invitation to tender under the competitive dialogue..................................

3.10

Conclusion of the competitive dialogue and submission of tenders..........

3.11

Evaluation of tenders and appointment of Interim Contractor................

3.12

Prizes or payments to the participants...................................................

DIFFERENCES BETWEEN THE NEGOTIATED PROCEDURE AND THE


COMPETITIVE DIALOGUE.............................................................................

5-1:

1.

W HAT

COMPETITIVE DIALOGUE

IS THE

C OMPETITIVE D IALOGUE ?

The "Competitive dialogue is a procedure in which any economic operator may


request to participate and whereby the Contracting Authority conducts a dialogue with
the candidates admitted to that procedure, with the aim of developing one or more suitable
alternatives capable of meeting its requirements, and on the basis of which the candidates
chosen are invited to tender (Directive 2004/18/EC, Article 1, 11c; and Law 12()/2006,
Chapter VI, Article 31, 1).

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2.

W HEN

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IS THE

C OMPETITIVE D IALOGUE A PPLIED ?

This procedure applies in cases of particularly complex contracts.

In such cases, the Contracting Authorities may, without this being due to any fault on
their part, find it objectively impossible to define the means of satisfying their
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needs or of assessing what the market can offer in the way of technical solutions and/or
financial/legal solutions.
This situation may arise in particular with the implementation of important integrated
transport infrastructure projects, large computer networks or projects involving complex and
structured financing, the financial and legal make-up of which cannot be defined in advance.
Such projects usually refer to concession contracts for important infrastructure projects and
to corresponding supply and service contracts.
To the extent that use of open or restricted procedures does not allow the award of such
contracts, a flexible procedure should be provided which preserves not only competition
between economic operators but also the need for the Contracting Authorities to discuss with
each candidate all aspects of the contract, including quite often the terms of the other tender
documents.
Therefore, pursuant to the legislation (see above), ...for the purpose of recourse to
this procedure, a public contract is considered to be particularly complex where
the Contracting Authorities:

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are not objectively able to define the technical means ... capable of satisfying their
needs or objectives, and/or

are not objectively able to specify the legal and/or financial make-up of a project."
From the above, it is clear that the competitive dialogue is a special procedure whose
application is subject to specific conditions. In considering to use this procedure, the
Contracting Authorities must examine each case separately. The objective impossibility
of Contracting Authorities to define the means of satisfying their needs or of assessing what
the market can offer in the way of technical solutions and/or financial/legal solutions is not an

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abstract concept. Contracting Authorities have an obligation of diligence, i.e. of proving in


each particular case the objective impossibility of defining the project.
2.1

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Technical complexity
"Technical complexity" exists for a project when the Contracting Authority is not able to
define the means of satisfying its needs or its objectives regarding that project.

Two cases may arise:


Either the Contracting Authority is not able to define the technical means to be used in
order to achieve the prescribed project or solution (this case should be fairly rare, given
that the inability to establish the technical specifications for the entire project or for part
of it, occurs only in exceptional cases),
Or the Contracting Authority is not able to determine which of several possible solutions
(options) would be best suited to satisfying its needs (this case may occur more often).
In both cases, the contract to be awarded should be considered as being particularly
complex.
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The relevant Explanatory Note of the European Commission on the competitive


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dialogue (CC/2005/04_rev.1 of 5.10.2005), gives as an example a Contracting
Authority that wants to create a connection between the shores of a river. It might be that the
Contracting Authority is not able to determine whether the best solution would be a bridge or
a tunnel, even though it is able to establish the specifications for the bridge (suspended,
metal, cable-stayed, in pre-stressed concrete etc.) or for the tunnel (with one or more tubes,
to be constructed under or on the riverbed etc.). In this case, the use of the competitive
dialogue by the Contracting Authority would be justified.
To the extent that the contract is not configured as a concession contract, the technical
complexity could be present in the case of certain projects relating to the construction of
major integrated transport infrastructure projects or the construction of major computer
networks (although such cases are also likely to present legal or financial complexities).
2.2

Legal or financial complexity

A financial or legal complexity may arise with the implementation of projects involving
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complex and structured financing, the financial and legal make-up of which cannot be
defined in advance by the Contracting Authority (Recital 31 of Directive 2004/18/EC, and
Law 12()/2006, Article 31). Such issues arise often in connection with projects of Public
Private Partnerships.
The relevant Explanatory Note of the European Commission on the
dialogue (CC/2005/04_rev.1, 5.10.2005) gives as an example of legal
complexity the situation where the Contacting Authorities awarding a contract for
a concessions contract cannot foresee whether the economic operators will be
accept the economic risk that such a concession contract implies.

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competitive
or financial
a project as
prepared to

In the event that, during the tender procedure, it concludes is established that the
Contracting Authority should assume these risks, the contract would end up being a
traditional public contract and not a concessions contract and, consequently, the entire
procedure would have to be cancelled, as there would be a risk of appeals or infringement
proceedings being filed with both national and Community authorities.

In such cases, the competitive dialogue allows these problems to be avoided, because the
procedural requirements imposed in connection with the tendering procedure would be
satisfied whether the contract results in a public contract or in a concessions contract.
Another example of legal or financial complexity which could justify the use of the
competitive dialogue (which concerns forms of private financing or Public-Private
Partnerships and is often mentioned in the above Explanatory Note as a common case in the
Commission's administrative practices [CC/2005/04_rev.1, 5.10.2005 page 3]), is the
following:
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A Contracting Authority is planning to rebuild a school and wants to limit the costs of this as
much as possible, by allowing the economic operators to propose various ways of
remuneration, including the use of land belonging to the Contracting Authority for housing
construction, commercial or sports purposes, together with payment or not. In the case in
question, the contract under award was a public works contract and not a concession.
For selecting the contractor, the Contracting Authority used in this case the negotiated
procedure with publication of a contract notice, invoking the impossibility of prior overall
pricing.
This particular option is possible allowed in exceptional circumstances of demonstrable
uncertainty as to the possibility of prior overall pricing by the Contracting Authority, and does
not cover cases in which this uncertainty results from other causes, such as the complexity of
the legal and/or financial framework put in place during the tender procedure. In this last
case the Contracting Authority must use of the competitive dialogue.
Other examples of projects that most often justify recourse to the competitive dialogue
could be projects in which the Contracting Authorities wish to have at their disposal a
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facility (school, hospital etc.) to be financed, built and operated by an economic operator
(where the economic operator would possibly also take care of maintenance works,
maintenance services, guard services, catering services etc.), often for a long period of time.
In these particular cases, the legal and financial set-up of an investment may be particularly
complex and, furthermore, the result of the tendering procedure may also be uncertain. In
other words, if the Contracting Authority puts the project out to tender in accordance with the
open or restricted procedure, then it must have specified in the tender documents the legal
and financial set-up of the investment, and the result of the procedure will be a public works
contract. On the other hand, if the Contracting Authority does not know from the outset the
legal and financial set-up of the investment, this will be determined during the tender
procedure, through discussions and consultations with the tenderers an approach not
allowed under the open or restricted procedure. The Contracting Authority must therefore in
this case adopt a procedure involving negotiations, such as the negotiated procedure or the
competitive dialogue. Based on the terms and conditions of these procedures, the
Contracting Authorities will discuss and negotiate the terms of the contract with the economic
operators.
In this way, the Contracting Authorities are in a position to know, upon the conclusion of the
competitive dialogue, whether they shall adopt follow a procedure for selecting a contractor
for a public works contract or for a concession contract, without running the risk of appeals or
infringement proceedings which could result in cancellation of the tender procedure.

2.3

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The award criterion in the competitive dialogue


Under the competitive dialogue, a public contract shall be awarded on the sole basis of
the award criterion for the most economically advantageous tender.

According to this criterion, the Contracting Authority shall examine and take into account, in
addition to the financial parameters, several other parameters of the contract scope, such as
quality, price, technical completeness, aesthetic and functional characteristics, operating
cost, performance and technical assistance, the date of delivery and the delivery or
execution deadline etc.

3.

H OW

IS THE

C OMPETITIVE D IALOGUE C ONDUCTED ?

Article 29 of Community Directive 2004/18/EC and Article 31 of Law 12()/2006 provide a


summary description of the way in which the competitive dialogue is conducted.
3.1

Publication of the contract notice

According to this procedure, the Contracting Authorities publish a contract notice in the OJEU
and in the Official Gazette of the Republic of Cyprus (OGRC), in which they make known
their needs and requirements, specifying them in the notice itself and/or in a "descriptive
document".
Within this framework, the Contracting Authorities initially publish the contract notice using
the standardised forms of the European Commission for the submission of contract notices,
and then a corresponding publication is also made in the national Press.
3.2

Release of the tender documents to the interested economic


operators

After publication of the contract notice, the Contracting Authorities release to the interested
economic operators the contract notice and/or the descriptive document, in which they
describe the basic information which they have available for the project, together with their
requirements. In the descriptive document (or in the contract notice, if a descriptive
document is not issued) the Contracting Authorities describe the tender procedure, the
qualitative selection criteria and the contract award criteria.
3.3

Selection of suitable economic operators for the competitive


dialogue

The Contracting Authorities select, in accordance with the following, the candidates with
whom they shall conduct a dialogue.
3.4

Verification of the suitability of participants

Verification of the suitability of the economic operators in the competitive dialogue and their
selection must be carried out in transparent conditions.
To this end, the qualitative selection criteria must be stated in the tender documents.
This criteria shall ensure non-discrimination, and the Contracting Authorities shall be
able to use them for selecting the appropriate candidates to be invited to the dialogue. In

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addition, the tender documents should also specify the information and data that economic
operators may use to demonstrate that they meet the above-mentioned criteria.
It is pointed out again that, in this spirit of transparency, the Contracting Authority should
indicate in the contract notice the qualitative selection criteria that it shall use for the
prequalification, as well as the specific capacity levels it may demand of the economic
operators in order to admit them to the procurement procedure.
The above also apply as a general rule in the open and restricted procedure, and in the
negotiated procedure with publication of a contract notice.
3.5

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Gradual reduction of the number of participants


In the competitive dialogue, the Contracting Authority may gradually reduce the
number of suitable candidates to be invited to participate in the dialogue.

This option is also available to the Contracting Authority in connection with the following
cases:
The invitation of requests to participate under the restricted procedure, and
The invitation to negotiate under the negotiated procedure with publication of a contact
notice.
Because of the flexibility that may be required and of the extremely high costs
associated with such procurement methods, in the case of the competitive dialogue
Contracting Authorities are allowed to provide for the procedure to be conducted in
successive stages in order to reduce gradually, on the basis of previously indicated award
criteria, the number of the tenders they will go on to discuss or negotiate. This reduction
should, insofar as the number of appropriate solutions or candidates allows, ensure that
there is genuine competition (Recital 41 of Directive 2004/18/EC).

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Reduction of the number of candidates should be performed on the basis of objective


criteria indicated in the contract notice, and on condition that the number of suitable
candidates is sufficient.

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These objective criteria do not necessarily imply the application of weightings. Therefore,
they do not preclude them. Consequently, the Contracting Authority may also use weighted
criteria.
These are usually applied when the number of candidates for prequalification is large and,
upon completion of suitability verification, the number of suitable candidates exceeds the
number foreseen in the contract notice. In this case, the Contracting Authority should make a
selection based on objective criteria and, to this end, it uses a marking scale to reduce the
number of suitable candidates based on weighted qualitative selection criteria.
As regards the criteria concerning the personal situation of economic operators, the inclusion
in the tender documents of a general reference to the corresponding cases under the
Community and the national legislation is considered sufficient (Recital 40 of Directive
2004/18/EC, where reference is made to Article 45 of the Directive on the personal situation
of the candidate or tenderer, and Article 51 of Law 12()/2006, respectively).

3.6

Minimum number of suitable candidates (economic operators)


for inviting requests to participate in the competitive
dialogue

The Contracting Authorities shall indicate in the contract notice the minimum number of
candidates they intend to invite and, where appropriate, the maximum number. The
minimum number is three (3). In all cases, however, the number of candidates to be invited
must be sufficient to ensure genuine competition.
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Therefore, in this procedure the contract notice cannot provide that only two (2)
candidates or only one (1) candidate will be invited.

In the competitive dialogue, the Contracting Authorities invite a number of candidates which
is at least equal to the minimum number of candidates specified in advance.
In the event that the number of candidates meeting the selection criteria and the minimum
levels is less than the minimum number (e.g. less than 3 or only 1), the Contracting Authority
may proceed with the procedure by inviting the candidate(s) meeting the required
competence levels.
The Contracting Authority cannot include in this procedure other economic
operators who have not submitted a request to participate or candidates who
do not meet the required capacity levels.

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Of course, in the above case the Contracting Authority may cancel the tender procedure and
repeat it on modified terms, if it estimates that this may increase participation and ensure
genuine competition.
It is pointed out that the above option is also available to Contracting Authorities in the
case of the negotiated procedure with publication of a contract notice.

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3.7

Conduct of the competitive dialogue

The Contracting Authorities then open, with the selected candidates, a dialogue the aim of
which shall be to identify and define the means best suited to satisfying their needs.
During this dialogue, the Contracting Authorities may discuss the various aspects of the
contract with the selected candidates.
During the dialogue, the Contracting Authorities shall ensure equality of treatment among all
tenderers.
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In particular, they shall not provide information in a discriminatory manner which


may give some economic operators an advantage over others.

3.8

Confidentiality in the competitive dialogue

The Contracting Authorities discuss with each candidate separately. The Contracting
Authorities may not reveal to the other participants solutions proposed or other confidential
information communicated by a candidate participating in the dialogue, without his/her
agreement.
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The obligation of confidentiality of information and non-disclosure of the solutions


proposed by the participants in the competitive dialogue without their agreement is

protected under the Community Directives (see references in Community Directive


2004/18/EC, Articles 6 and 29(3), and in Law 12()/2006, Article 31, 3).
It should be pointed out that the competitive dialogue is the only award procedure laid down
by the Community Directives providing protection for ideas not subject to intangible property
rights.
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It should be noted that a similar provision applicable to the consultation/negotiation


stage of negotiate procedures does not exist under the Community Directives.

This means that the Contracting Authorities cannot apply the principles of the competitive
dialogue in cases of negotiated procedure without having justified that the particular cases
also qualify for the application of the competitive dialogue.
This is particularly important as it allows the Contracting Authority to continue the dialogue
until it can identify the solution(s) capable of meeting its needs, without violating the
principles of transparency and equal treatment of the economic operators participating in the
dialogue.
This procedure also takes into account the provisions of the following paragraphs.
3.9

Gradual reduction of the number or economic operators in the


invitation to tender under the competitive dialogue

Under the Community and the national law, Contracting Authorities may provide for the
procedure to be conducted in successive stages in order to reduce, on the basis of
award criteria indicated in the tender documents, the number of solutions that they will go
on to discus or negotiate. This reduction should, insofar as the number of appropriate
solutions or candidates allows, ensure that there is genuine competition (Recital 41 of
Directive 2004/18/EC, and Law 12()/2006, Article 31, 4).

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Therefore, the Contracting Authorities may provide for the procedure to take place in
successive stages in order to reduce the number of solutions to be examined during the
dialogue stages, by applying the award criteria already indicated in the tender documents.
Recourse to this option is also indicated in the tender documents.
The need for this arises because of the flexibility that may be required and of the extremely
high costs associated with the preparation of the tenders in the case of the competitive
dialogue.
It is pointed out that the above option is also available to Contracting Authorities in the
case of the negotiated procedure with publication of the contract notice, provided that they
apply the award criteria already indicated in the tender documents.

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It also stressed that "this procedure must not be used in such a way as to restrict or distort
competition, particularly by altering any fundamental aspects of the tenders, or by imposing
substantial new requirements on the successful tenderer, or by involving any tenderer other
than the one selected as the most economically advantageous" (Recital 31 of Directive
2004/18/EC, and Law 12()/2006, Article 31).

3.10 Conclusion of the competitive dialogue and submission of


tenders
Having declared that the dialogue is concluded and having informed the participants of this,
the Contracting Authorities ask them to submit their final tenders on the basis of the solution
or solutions presented and specified during the dialogue.
These tenders must contain all the elements required and necessary for the performance of
the project.
At the request of the Contracting Authority, these tenders may be clarified, specified and finetuned.
However, such clarification, specification, fine-tuning or additional information may not
involve changes to the basic features of the tender or the call for tender, variations in which
are likely to distort competition or have a discriminatory effect.
3.11 Evaluation of tenders and appointment of Interim Contractor
The Contracting Authorities shall evaluate the tenders as submitted by the economic
operators and shall select the most economically advantageous tender.
Evaluation of the tenders is based on the award criteria specified in the tender documents.
These criteria relate to the scope of the particular public contract and are usually weighted.
These weightings may be expressed by providing for a range with an appropriate maximum
spread. For example, tenders failing to obtain a mark higher than 70% of the weighted
marking are rejected.
Where, in the opinion of the Contracting Authority, weighting is not possible for demonstrable
reasons, the Contracting Authority shall indicate in the tender documents the criteria in
descending order of importance.
It is noted that this option is available to the Contracting Authorities in all procedures
where the award criterion is the most economically advantageous tender, provided that the
award criteria are specified in the tender documents.
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After the conclusion of the evaluation of tenders, the economic operator identified as having
submitted the most economically advantageous tender is asked, as "Interim Contractor", to
clarify aspects of his tender or confirm the commitments contained in his tender, provided
that this does not have the effect of modifying substantial aspects of the tender or the call for
tender, variations to which may distort competition or have a discriminatory effect.
In cases of disagreement with the Interim Contractor, the Contracting Authority may
proceed to negotiations with the second candidate on the list, with the third and so on. This
provision must be clearly stated in the tender documents.
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Once the contractual documents are finalised, the Interim Contractor is invited to sign the
contract as the "Contractor".
3.12 Prizes or payments to the participants
If they deem that the costs of participation in the procedure are too high for the economic
operators, Contracting Authorities may specify the prizes or payments to be awarded to the

participants in the dialogue. A relevant reference should be included in the tender


documents.
The procedure described in detail above is summarised in the following figure.

Competitive dialogue

Publication of the Contract Notice in the OJEU (if required) & the Official
Journal of the Republic of Cyprus

Requests to Participate

Prequalification of Candidates

Invitation to Participate in the Dialogue

Dialogue stage
Dialogue on the tender documents and the terms of reference
Possibility for gradual reduction of the number of tenderers, on the basis of the
award criteria

Final Tenders

Evaluation of Tenders

Selection of Interim Contractor

Negotiations with the Interim Contractor


(clarifications and commitments without modifying the terms of the tender
documents)

Contract Signature

Figure 1: Individual steps of the competitive dialogue

4.

D IFFERENCES BETWEEN THE N EGOTIATED P ROCEDURE


C OMPETITIVE D IALOGUE

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AND THE

Regarding the choice of procurement procedure:

The negotiated procedure is applied in a restrictive sense, under specific


circumstances which are exceptional and are provided for by the applicable legislation
(as described in the respective paragraphs).
The competitive dialogue applies only in cases of extremely complex contracts.
The most characteristic example of the differences in the above is the case of a project
initially put out to tender using an open or restricted procedure or the competitive dialogue, in
response to which irregular or unacceptable tenders were submitted. The Contracting
Authority may either cancel the tender procedure or repeat it using only the negotiated
procedure.
Regarding the selection criteria, these are common in both procedures.
Regarding the award criteria:
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In the negotiated procedure, the criterion used to award the public contract is either the

most economically advantageous tender or exclusively the lowest price.


In the competitive dialogue, the criterion used to award the public contract is solely the
most economically advantageous tender.
Compared to the negotiated procedures, and especially those without publication of a
contract notice, the competitive dialogue is more rigorously structured and more strictly
regulated by the Community Directives and the national transposition law. In the negotiated
procedures, the Contracting Authorities enjoy greater freedom of movement, as there the
relevant legislation does not provide for specific rules governing these procedures; however,
they must always adhere to the principles of the EU Treaty, which apply to all public
procurement procedures.
The Table below summarises the key features of the competitive dialogue and of the
negotiated procedure with publication of a contract notice.
Table 1: Key features of the competitive dialogue and the negotiated procedure

Negotiated procedure
with publication of a contract notice
Used in cases where:
Irregular or unacceptable tenders are
submitted in response to an open or
restricted procedure.

Competitive dialogue
Used in the case of extremely complex
contracts, when the Contracting Authority is
objectively unable to define the technical
means and the legal/financial make-up of the
project.

Prior overall pricing is not possible.


The specifications for services are not
established with sufficient precision.
Works are performed for the purpose of
research, testing or optimisation.
Invitation of requests to participate

Selection of suitable candidates

Prequalification

Dialogue with the economic operators


with the aim of identifying appropriate

Invitation to tender

Negotiated procedure
with publication of a contract notice
Negotiation of tenders in order to adapt
them to the terms of the contract
Award of contract

Competitive dialogue
solutions
Submission of tenders
Award to the tenderer having submitted
the most economically advantageous
tender
Clarification confirmation of all aspects
of the tender

Final discussions and negotiations with the


contractor for the conclusion of the contract
Prohibition of modifications to substantial
elements of the tender or of terms of the
contract notice.

Prohibition of modifications to substantial


elements of the tender or of terms of the
contract notice.