Evaluating Tenders
The award of tenders on the basis of lowest price is often a
false economy. Tenders should be assessed on the value for money
they offer the authority - that is the optimum balance of costs and
benefits that meets the client’s requirement, including whole life
costs such as those in the table below.
Whole life costs
- Initial price
- Delivery and installation
- Operative resources
- In-house management resources
- Consumables
- Spare parts
- Licences
- Taxes
- Maintenance
- Energy consumption
- Depreciation
- Disposal
Evaluation of quality will entail the Client and Procurement
Unit in identifying the criteria against which they will evaluate
suppliers’ proposals, weighting these on the basis of their
relative importance and scoring them.
Quality criteria need to be carefully identified for each
procurement project. They will differ from project to project. The
Procurement Manager will discuss mechanisms and identify the best
balance of cost and quality in conjunction with the client.
Post-Tender Negotiation (PTN) is the process of negotiating with
a tenderer whose tender appears to offer best value for money in
order to obtain improved terms for the authority. Information from
these activities should be fed back into the tender evaluation
process.
PTN is only successful when it has:
- produced an outcome that is acceptable to both sides;
- been carried out efficiently and is not more resource intensive
than necessary;
- encouraged and supported a good working relationship between
the parties rather than reinforced adversarial relations. It should
be noted that where the procurement regulations apply there are
restrictions in the use of PTN for above-threshold contracts under
the open and restricted procedures.
PTN should therefore only be undertaken with advice from the
Procurement Unit.