Global Market Outlook on Evaluation Of Bids

Laws Governing Public Procurement

  • The laws of the European Union were incorporated into the UK Law as Public Contract Regulations (PCR)
  • Contracts above a specific threshold are required to be advertised in the Official Journal of the European Union (OJEU). Contracts below the threshold are not governed by the regulations subject to certain exceptions

Brexit Impact on Public Procurement Laws

When the UK leaves the EU, the impact on public procurement laws are expected to be minimal, since making changes in the laws are expected to be complicated and time-consuming for the government and the new laws of UK are expected to be on similar lines as the PCR.

Procurement Priorities

Small to Medium-Sized Enterprises (SMEs):

  • The government has committed to 33% of its spend to go to SMEs by 2020

Apprenticeships and Skills

  • Public contracts of GBP 10 million or greater and for 12 months or longer should support skill development and the government has committed to create 3 million apprenticeships by 2020

Bid Evaluation Methods

MEAT is the most commonly used tender evaluation method in the public sector, since it considers a price quality ratio. 

Direct Appointment

Predominantly used in the private sector for:

  • Low-risk projects
  • Having pre-qualified suppliers
  • It is valuable to maintain long-term relationship with a single supplier 

The lowest price bidder is awarded the contract and is mostly used for projects that are of:

  • Low-value
  • Well scoped
  • No difference in quality
  • No maintenance requirements
  • Risks are not significant
  • Does not have a significant impact on the success of the project

Most Economically Advantageous Tender (MEAT)/Best Value

This process considers a mix of quality and price, scoring of these parameters based on weights and adding the scores to get an overall score. E.g., Price and quality could be 60:40, depending on how important they are to the buyer and the project in hand.

Quality Only

This method is typically used for projects where:

  • The scope is not clear/difficult/time-consuming
  • The price of the contract cannot be reasonably estimated

The organization and supplier need to be very co-operative for successful completion of the project.

Why are Quality Thresholds Used?

Price and quality weighting along with quality thresholds is the recommended best practice for public procurement.

Why Quality Thresholds?

Quality thresholds are used to ensure that a minimum quality is assured, irrespective of the price of the contract.

Pros:

  • Risk of awarding the contract is less, since a minimum quality threshold is assured
  • When the number of bidders for a contract is very high, quality thresholds offer a quick one-step elimination solution

Price and Quality Weighting along with Quality Thresholds

Step-by-step Guide To Price Quality Evaluation Using Quality Thresholds

  • Use quality thresholds as the first step to evaluate suppliers
  • Eliminate suppliers who do not meet the quality threshold
  • Do the quality evaluation by assigning scores and weights and then do a relative scoring based on the highest quality
  • Do a price evaluation by scoring the price relative to the lowest price bid
  • Assign weights to price and quality and arrive at the total score
  • The bidder with the highest overall score is the top bidder