Agenda item

Reference was made to article 40 of the minute of meeting of this Committee of 11 March, 2010 whereby officers were instructed to prepare a report on the introduction of a quality/price basis for assessment and award of competitive tenders. The Committee had before it on this day the report requested by members.

The report advised that for legal requirements, tenders must be undertaken in two stages, namely selection and award. With regard to the selection process, under the Public Contracts (Scotland) Regulations 2006 (the 2006 Regulations), contracting authorities may require bidders to satisfy minimum levels of economic and financial standing, and/or technical ability. Contracting authorities should also check that no bidders meet the mandatory or discretionary rejection factors stated within the 2006 Regulations. Any selection process would be undertaken by means of the pre qualification questionnaire where the restricted procedure would be used, and within the invitation to tender when the open procedure would be used. The selection stage focused on the supplier’s characteristics and suitability in principle to satisfy the contracting authority’s requirement. Contracting authorities must use the selection phase to identify the bidders who will go on to have their tenders evaluated at the award stage.

The invitation to tender (ITT) is the award stage, and at this point all remaining bidders will have satisfied the selection criteria and will have been assessed as being qualified to perform the contract.  The award stage must focus on the tenders rather than the tenderers.  There would be two grounds for awarding a public contract under the 2006 Regulations, namely (1) the lowest price, where the lowest priced tender wins and no other element of the tender may be taken into account; or (2) the most economically advantageous tender (MEAT), where other criteria, or criteria in addition to price, like quality, technical merit and running costs could be taken into account.

Where MEAT is chosen, award criteria must be linked to the subject matter of the contract and would include:

·            quality

·            price

·            technical merit

·            aesthetic and functional characteristics

·            environmental characteristics

·            running costs

·            cost effectiveness

·            after sales service

·            technical assistance

·            delivery date and delivery period

·            period of completion.

The report proposed that the Council should use MEAT for the majority of procurements as there were very few purchases where the Council would not wish to evaluate a quality element. The report did suggest however, that when purchasing simple commodities (off the shelf), lowest price evaluation may be appropriate. Evaluation on the basis of price alone may also be appropriate in the procurement of specific works contracts where the bill of quantities or schedule of rates was so prescriptive and detailed as to the quality standard, that lowest price could be applied.

The report highlighted that when setting questions for tender evaluation it was important to ensure that there were no questions asked that related to the selection stage.  This was because the use of selection criteria such as experience at award stage may perpetuate the advantage of an incumbent or previously used supplier, to the detriment of other qualified tenderers.  The report explained that evaluation criteria must treat all bidders equally and should be evaluated in a transparent manner; and criteria must be proportionate and relate to the subject matter of the contract. The report continued that contracting authorities must publish their evaluation criteria and scoring methodology in the ITT and the contract notice inviting expressions of interest; ensure that they follow the methodology set out in the ITT as this could not be deviated from at any point without exposing the contracting authority to the risk of legal challenge; and include any sub criteria within the ITT.

The report explained that tenderers now had enhanced powers to challenge the decisions of contracting authorities, and their success or otherwise in the challenge would be dependant on how robust the Council had been in ensuring all evaluation and award criteria was fair, transparent and proportionate to the need in question.

The Committee resolved:-

(i)         to note the content of the report;

(ii)        to instruct all Services to evaluate tenders on the basis of the most economically advantageous tender (MEAT), using a price/quality matrix, unless there is an approved justification sanctioned by the Head of Procurement and the relevant Head of Service for evaluating solely on the basis of lowest price.