Methods of Evaluating Bids

Because the process that leads to identification of the most economically advantageous tender needs to be auditable and objective, most public sector authorities employ a form of marking scheme in which each bid is scored against the defined criteria, which are weighted to reflect their degree of priority. Evaluators normally use scoring sheets or evaluation matrices (Figure 22.1) and may also prepare written statements of the strengths and weaknesses of each bid. They seek to establish a consensus about the merits of the competing bids, discussing any major discrepancies in assessments or scores. The bids are then ranked in the order of their total scores. Either the bid with the highest score is selected as the winning bid, or - if the evaluation is in two parts, the first concerned with technical merit and the second with price - those bids with total scores at or above a pre-set threshold (say 65 or 70 points out of a maximum 100) go forward to a financial evaluation before being given a final rank on the basis of their combined and weighted technical and financial scores. This final rank identifies the most economically advantageous tender.

	Weight	Firm 1	Firm 2	Firm 3	Firm 4	Firm 5
A Experts proposed	40
A1 Competencies and qualifications of seminar personnel:
Experience in financial aspects of transport development	12
Experience in transport-related training	10
Experience in C and E Europe	8
Additionally for Seminar Leader:
Leadership, coordination and management of comparable seminars	10
B Experience of the firm	10
B1 General experience in financial analysis of infrastructure projects and transport schemes	4
B2 Practical experience of training event implementation in C and E Europe	4
B3 Experience of providing training seminars related to the transport sector	2
C Organization and methods	50
C1 Logic and organization of proposal	3
C2 Understanding the project objectives	3
C3 Appropriateness of seminar team:
Size of team	3
Structure of team	3
C4 Programming of seminar preparation	3
C5 Proposed work plans for seminar components	8
C6 Appropriateness and blend of proposed training methods	3
C7 Timetables and time inputs	3
C8 Proposed seminar materials	3
C9 Integration of local counterpart support	3
C10 Multiplier benefits and added value of proposal	4
C11 Choice of seminar location	4
C12 Proposed seminar timing	4
C13 Logistical arrangements	3
TOTAL (maximum points available = 100)	100
All firms scoring over 65 points qualify for financial evaluation
This example is drawn from the technical evaluation of proposals for an EC-funded training project.

Figure 22.1: Example of a Technical Evaluation Matrix

The relative weight given to the technical and financial scores in this calculation (the quality:price ratio) may follow a set formula (eg 70 per cent quality, 30 per cent price) or it may be decided on a case-by-case basis. As a general principle, the more a contract for services or consultancy demands complex analytical work or innovative thinking, the greater the weight attached to quality in the bid evaluation: so, for example, the quality:price ratio for a strategic planning contract or a feasibility study might be set at 80:20. These values are likely to be reversed for what may be considered routine, straightforward work or repeat projects, where the emphasis will be predominantly on price.

The structure of the marking scheme will be conditioned by the nature of the contract. In cases where the standard of contract performance appears likely to be determined by the calibre of the key people undertaking the work, 50 to 60 per cent of the technical evaluation marks may be awarded in respect of personnel, while the proposed methodology may carry 30 to 40 per cent and the qualifications and experience of the contractor 10 per cent. If the bid nominates a team leader or project director, this individual's competence, suitability and experience can have a critical bearing on the marks awarded for personnel. Methodology may have more importance in the marking where the contract involves intricate processes of technical analysis.

Clients may base the financial evaluation on a comparison of total bid prices, unit prices (for example, fees and direct costs divided by the number of staff-days or staff-months) or the overall costs of the required services over the life of the contract (whole-life costs). In public sector procurement the recommended policy is to judge best value for money on the basis of whole-life costs. Various formulas may be applied in scoring price. For example, where a quality:price ratio of 70:30 is used, the lowest-priced bid may automatically be awarded the full 30 points available and the other bids marked by dividing their prices into the lowest price and multiplying the result of the division by 30; or the mean price of, say, the three lowest-priced bids may be given a value of 30 points, and one point may then be deducted from the score of each bidder for each percentage point above the mean, while one point is added to the score of each bidder for each percentage point below the mean.

In those contexts where it is standard practice to accept the lowest-priced responsive tender and variant solutions are permitted, clients will normally apply specific procedures for dealing with variations so as to ensure a fair basis of comparison. These procedures may be identified in the bid specification.

Where a contract is subject to public sector procurement procedures, a bid with a price that is abnormally low cannot be rejected out of hand. The bidder has to be given an opportunity to explain and justify the price, which may, for example, reflect the use of particularly economical procedures and novel solutions or other factors allowing the required services to be delivered for a cost that competitors cannot match. The authority may still turn the bid down as unreliable, but only after it has reconsidered its content against the bidder's explanation.

For large-scale and high-value contracts, the client may undertake tender evaluation in two stages. The first stage uses the process of technical and financial evaluation described here to identify, say, two or three shortlisted bidders who are asked in the second stage to refine their bids and develop further their proposed solutions to the client's requirements. Commercial negotiations may start during this second stage. The shortlisted bidders will be evaluated on their final responses and the client will then select a preferred bidder for detailed negotiations.

The evaluation process may include interviews and presentations (Chapter 23). Before formally awarding a contract, clients may wish to refer their selection decision to an independent expert for endorsement, for example on the value-for-money aspects of a bid.

Main steps in a typical evaluation process - public sector

• Commercial and financial analysis by procurement managers.

• Technical analysis by task managers, focusing on:

  • conformity with specification, technical requirements and programme;

  • technical alternatives, where these are permitted;

  • quality of resources;

  • practicality of methodology.

• Review of safety and quality aspects of the tender, including:

  • quality plans;

  • contractors' documented quality and safety system;

  • compliance with specific health and safety, equality of opportunity, environmental and other regulations.

• Review of proposed subcontracting arrangements, where appropriate.

• Value-for-money assessment.

• Recommendations on contract award.