Tender and award

The system knows two criteria, and the difference between them is not only technical. It changes the tender strategy and not only the method of calculation.

The lowest price criterion awards to the lowest tender, and the competition turns on a single variable. The code confines its use to defined situations.

The most economically advantageous tender criterion awards on the basis of the best quality to price ratio, assessed against criteria and sub criteria set out in the tender documents with their weightings. The weighting is not fixed by the rules and varies from one procedure to another.

The code identifies the cases in which the second criterion is mandatory, including labour intensive contracts, and otherwise leaves the choice to the authority within the applicable framework. Below threshold that freedom is wider, and is known as the principle of free choice of criterion.

The effect on bidding strategy is clear. Under the price criterion preparing a tender is essentially an exercise in estimating and margin. Under the most economically advantageous tender criterion it is an exercise in reading the evaluation criteria, and the technical score is built by answering what the authority has stated it will assess.

Where the most economically advantageous tender criterion applies, technical evaluation is entrusted to an evaluation committee whose composition, appointment and working arrangements are governed by the code. The committee is appointed after the deadline for submitting tenders.

Two elements matter in practice for an operator. The first is that the evaluation criteria and their weightings are fixed in the tender documents and bind the committee: an authority that has bound itself to its own tender documents cannot depart from them. The second is that the reasoning behind the scores is where litigation concentrates, and its quality depends on how verifiably the criteria were defined.

Aspect	Lowest price	Most economically advantageous tender
Variables in competition	Price alone	Quality and price under the stated weighting
Evaluating body	Tender board	Evaluation committee
Weighting	Not applicable	Set by the authority in the tender documents
Scope of use	Standardised services and below threshold	The general rule, mandatory in the typed cases
Main lever for a bidder	The discount, within the anomaly limits	The technical report built on the criteria

A tender that is too low is not necessarily a better tender, and the code provides two distinct mechanisms for managing the phenomenon. One operates adversarially, the other on a statistical basis.

The first is the congruity check, by which the authority asks the tenderer to justify the price offered. It is the ordinary mechanism and concludes with the tender being accepted or excluded.

The second is automatic exclusion, provided for certain below threshold situations. Where a works or services contract below the EU thresholds and without certain cross border interest is awarded on the lowest price criterion, the code provides for automatic exclusion of tenders exceeding the anomaly threshold identified under the criteria laid down.

One aspect connects this subject to the pricing of the tender. The labour costs stated separately by the tenderer are one of the elements on which the sustainability check turns, and their consistency with the authority's own estimate is subject to scrutiny.

Between award and signature of the contract the code interposes time limits that serve a protective function and must be factored into programming. The standstill periods allow unsuccessful bidders to pursue remedies.

There are standstill periods within which the contract cannot be signed, intended to allow unsuccessful tenderers to pursue remedies. And there are periods within which signature must take place, whose expiry produces effects the code governs.

For a successful tenderer the consequence is that the award date is not the start date: between the two sit checks, periods and formalities that must be built into resource planning. The gap is measured in weeks and belongs in the resource plan.

Under the most economically advantageous tender criterion the structure of the weighting determines the strategy, and reading it precedes every choice. A heavy weight on quality rewards the design, a heavy weight on price rewards the discount.

The total score comprises a share attributed to the technical component and a share attributed to the financial component, in a proportion fixed in the tender documents. That proportion determines how many points a discount can recover and how far a strong technical tender can withstand a competitor bidding more aggressively on price.

A second element weighs just as much: the formula for attributing the financial score. Different formulas produce very different scores for the same discount, and some sharply reduce the advantage of large discounts.

An operational point follows. Before deciding the size of the discount it is worth reconstructing the score obtainable under two or three scenarios, applying the formula in the tender documents. It is a calculation that takes little time and avoids the costliest choice at this stage, namely a discount that compresses the margin without moving the ranking.

Three points follow from the above and hold whichever criterion applies. They concern reading the notice, pricing strategy and documentary consistency.

The tender documents should be read starting from the evaluation criteria rather than from the description of the subject matter. It is the criteria that say what the authority will assess, and a technical tender built on one's own idea of quality rather than on the stated criteria loses points on elements the tenderer treated as secondary.

The financial component should be built on an estimate rather than on a target discount. A tender that fails the congruity check is a tender lost after bearing the cost of preparing it.

Labour costs and the operator's own safety costs must be stated separately as the rules require, and their internal consistency with the rest of the tender is capable of verification. An inconsistency between those figures and the discount offered is the first point raised on congruity.