Developing Evaluation Criteria

Background

Establishing evaluation criteria is an important part of many procurement processes. When developed appropriately criteria should determine whether or not the potential bidder is suitable, be directly related to the material substance of the contract, and be clear enough to ensure that the potential bidders have an accurate understanding of what is most important to the procuring entity.

Criteria and their assigned weights will vary by the type of good or service to be procured. Extensive market and supplier research, along with a full understanding of the subject matter of the tender, will aid in the selection of the most appropriate evaluation criteria for the particular procurement.

Definition

Once the appropriate procurement method is selected and before issuing the tender document, procurement professionals and procuring entities must establish the criteria by which resulting bids or proposals will be evaluated.

Evaluation criteria are the means of determining that a bidder has the necessary qualifications and competence to fulfil the objective(s) of the procurement transaction. There are two types of evaluation criteria.

1. Selection Criteria: Criteria that are used to qualify a bidder. The criteria should determine whether or not the bidder has the capability/capacity to meet the requirements of the tender document and the subsequent contract. The criteria may include criterion to assess the bidder’s financial status, ethical standards, quality of services provided or goods supplied, capability/capacity of facilities/ equipment used to provide the good or service, reliability, management, experience, and technical ability.

2. Award Criteria: The criteria identified at the award stage must relate directly to the goods or services to be provided. Award criteria should evaluate the bidder’s conformance to all material requirements set out in the tender document.

Developing evaluation criteria

Development of the evaluation criteria will vary depending on the type of procurement method selected and may include the use of selection criteria, award criteria or both. Generally, evaluation criteria may be established for either a single-step, or a multi-step procurement method.

Selection Criteria (Qualification Criteria)

When a multi-step procurement method is selected, bidders may be “qualified” according to the selection criteria. The election criteria may include evaluation for:

• economic and financial status (ability to provide required bonds and have applicable insurances in place)
• technical and professional ability (including any certifications/licences/warranties required
• reference checks to determine performance and reputation of bidder
• quality of goods/ services provided
• reliability (e.g. will the bidder be reliable, ethical, and faithfully fulfil all terms of the contract?)
• ethical policies and practices (e.g. determined through reference checks, past performance evaluations, company policy on ethics, etc.)
• management processes and ability to perform the contract.

Note: Cost is not a consideration during this phase.

Award Criteria

Award criteria may be used alone in a single-step procurement, or following the qualification phase (See: Selection Criteria), of a multi-step procurement, to determine which bidder provides the most economically advantageous offer[1], to perform the service or deliver the goods specified in the contract.

Where bids or proposals are evaluated for VFM, award criteria must be linked to the material requirements of the contract and may include criteria for[2]:

• price
• quality
• technical merit
• aesthetic and functional characteristics
• environmental characteristics
• operational cost
• cost effectiveness
• service costs
• technical assistance
• delivery date and delivery period
• completion schedule
• social considerations
• sustainability
• innovation

Weighting Criteria

Each criterion should be weighted to reflect its relative importance to the contracting authority. The identification of criteria and weights must be carried out with care to ensure that the contracting authority identifies the most advantageous offer. These criteria will vary depending on the type of procurement that is being undertaken. For example, quality may be more important than price and therefore criteria should be weighted to reflect the relative importance.

To accomplish effective weighting of criteria, the following factors must be taken into account:

• weightings may be assigned a range that specifies a minimum and maximum weighting. The application of such weightings is up to the contracting authority and appropriate use may be determined based on the subject matter of the contract.
• when a decision to split the weightings between price and quality is made, the overall split between price and quality should be decided first (for example – 80% may be awarded for quality for a highly technical consultancy contract and 20% for price) and then weighting allocated to the quality sub-criteria.

­Notification of Criteria

Proper publication and notification of intended evaluation criteria in the tender documents will help the bidders to fulfil the needs of the procuring entity. Furthermore, formal publication, in full, of these criteria at the start of the tender process will protect the procuring from challenges that the criteria were chosen post notification to favour a particular bidder. It will also demonstrate fairness and transparency in the procurement process

Evaluation criteria and their associated weightings must:

• be agreed before the tender process begins.
• be published in the notice for the contract, or within the tender documents, or both.
• not be changed once they have been advertised and notification has been sent to the bidders. If changes become necessary, all bidders must be notified of the changes.
• be confirmed to the evaluation panel at the beginning of the evaluation process.

[1] Obtaining value for money – a combination of quality and whole life costs (VFM)

[2] Note: This is a non-exhaustive list based on the UK Procurement Regulation (see www.mytenders.com).