1.
© OECD
3rd regional conference on public
procurement for ENP East countries
Contract award criteria
Dariusz Koba, KCG, Poland
Tbilisi, 6-7 November 2019

2.
Two types of requirements
Procuring authority sets in tender documents many different
requirements concerning:
 subject matter
 contractor’s credibility
 contract
 costs or prices
All requirements may be set as:
 conditions, minimum standards which must be met,
fulfilled, evaluated on „yes/no” manner
 criteria evaluated by a scale, „to what extend is fulfilled”
Problem: Directives call minimum requirements (conditions)
concerning contractor’s credibility selection criteria (better
use this term to prequalification).
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3.
Conditions vs. criteria
You can indicate several general relationships:
 the better the contracting authority can define its needs,
the more requirements can be set as conditions;
 the more precisely conditions are defined, the smaller the
need to use technical criteria or the less their importance;
 the higher requirements, the greater the danger that they
may violate the principles of fair competition, which can
be resolved by formulating requirements by means of
criteria.
We use criteria not to hinder competiton but to support it.
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4.
Legal obligations
• Disclosure of criteria
To ensure compliance with the principle of equal treatment in the award
of contracts, contracting authorities should be obliged to create the
necessary transparency to enable all tenderers to be reasonably
informed of the criteria and arrangements which will be applied in the
contract award decision. (p. 90 of the preamble of the Directive
2014/24/EU).
• Determining the importance of criteria
The contracting authority shall specify, in the procurement documents,
the relative weighting which it gives to each of the criteria chosen to
determine the most economically advantageous tender, except where
this is identified on the basis of price alone. Those weightings may be
expressed by providing for a range with an appropriate maximum spread.
Where weighting is not possible for objective reasons, the contracting
authority shall indicate the criteria in decreasing order of importance.
(art. 67 para. 5 of the Directive 2014/24/EU).
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5.
Legal obligations
• Applying verifiable criteria
The criteria shall ensure the possibility of effective competition and shall
be accompanied by specifications that allow the information provided by
the tenderers to be effectively verified in order to assess how well the
tenders meet the award criteria. In case of doubt, contracting authorities
shall verify effectively the accuracy of the information and proof provided
by the tenderers. (art. 67 para. 4 of the Directive 2014/24/EU).
• Criteria linked to the subject-matter
Award criteria must be linked to the subject-matter of the procurement.
(art. 67 para. 3 of the Directive 2014/24/EU).
• Prohibition of criteria concerning contractor’s credibility
The exceptions to this rule are procurements for social services and non-
priority services in the field of defense and security.
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6.
Legal obligations
• Objective criteria
Contracts should be awarded on the basis of objective criteria that
ensure compliance with the principles of transparency, non-
discrimination and equal treatment, with a view to ensuring an objective
comparison of the relative value of the tenders in order to determine, in
conditions of effective competition, which tender is the most
economically advantageous tender. (p. 90 of the preamble of the
Directive 2014/24/EU).
• Does that mean criteria must me measurable?
• Degree of precision of criteria – freedom of choice
Award criteria shall not have the effect of conferring an unrestricted
freedom of choice on the contracting authority. (art. 67 para. 4 of the
Directive 2014/24/EU).
• measurable ---------------------- unrestricted freedom
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7.
Examples of criteria
Criteria may comprise, for instance:
 quality, including technical merit, aesthetic and functional
characteristics, accessibility, design for all users, social,
environmental and innovative characteristics and trading
and its conditions;
 organisation, qualification and experience of staff assigned
to performing the contract, where the quality of the staff
assigned can have a significant impact on the level of
performance of the contract; or
 after-sales service and technical assistance, delivery
conditions such as delivery date, delivery process and
delivery period or period of completion.
(art. 67 para. 2 of the Directive 2014/24/EU).
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8.
Types of criteria
Taking into account the principle that all criteria must be
related to the subject of the contract, it seems appropriate to
distinguish the following types of criteria:
 economic criteria, the most important, though not the
only, price;
 qualitative criteria referring to the quality of the subject
of the contract;
 contractual criteria referring to the manner of contract
performance;
 criteria for responsible development including social,
environmental and innovation issues;
 contractor’s credibility criteria - allowed only when
ordering social services and non-priority services in the
field of defense and security. 7

9.
Strategies for selecting MEAT
Contracting authorities shall base the award of public
contracts on the most economically advantageous tender
(art. 67 para.1 of the Directive 2014/24/EU).
Most economically advantageous tender (MEAT) is now the
sole criterion and operates as an ‘umbrella criterion’ for the
award of the contract.
Directives seem to suggest the application of MEAT may
include three different options:
 the price only
 cost only (including life-cycle-costing)
 the best price/quality ratio
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10.
Strategies for selecting MEAT
I believe that cost only option is not a separate strategy, but a
type of strategy which tends to the minimization of costs, like
price only option. The difference is if you take into account
only initial cost of purchase or total cost of ownership or
even life-cycle-costing.
From an economic point of view, the choice of an offer may
follow one of three strategies:
 the lowest price/cost
 the best price-quality ratio
 the highest quality.
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11.
Minimization of cost
The choice of the offer is only based on the price or cost
criterion. This strategy requires that all other requirements
are precisely defined in terms of conditions:
 technical specifications, functional requirements, technical
standards of subject-matter
 contractual clauses determining time for execution of
contract, warranty requirements and so on.
The ordering party does not care about exceeding the set
requirements, but on their fulfillment at the lowest possible
price.
Good strategy for:
 printing paper / other office supplies?
 construction works (build)?
 …………………………….. 10

12.
Minimization of cost
Variants or the strategy
 Price only - the only cost is the price to be paid
 Total cost of ownership (TCO) - when there are additional
costs to be paid in future (e.g. printers or copiers, when
the costs of consumables (inks, toners) are more
important for printing costs than the price of the devices
themselves).
 Life-cycle-costing (LCC) approach demands to take into
account not only TCO costs, but also costs imputed to
environmental externalities linked to the product, service
or works during its life cycle (art. 68 para. 2 of the
Directive 2014/24/EU)
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13.
Maximization of quality
In this strategy the price- or cost-related criteria are not
taken into account when selecting the offer. This does not
mean lack of interest in amount of expenditure, it means
only lack of preferences "the cheaper, the better".
The strategy demands informing contractors about planned
expenses or maximum budget which may be appropriate
especially in procurement of of intellectual services, when
the provision of this information is desirable and even
necessary.
The cost element may also take the form of a fixed price or
cost on the basis of which economic operators will compete
on quality criteria only (art. 67 para. 2 of the Directive
2014/24/EU).
Good strategy for intellectual services… 12

14.
Quality – concept of fulfilment
The concept of order fulfilment is an „umbrella criterion”.
The contractor should be able to convince the contracting
authority that he is able to properly perform the contract.
The assessment may cover various aspects of the concept
that affect the expected quality and timeliness of the
contract, e.g.
 understanding the essence of the contract and the role of
the contractor;
 way to achieve the established goals, methods and means
of reaching the goals;
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15.
Quality – concept of fulfilment
 understanding the risks associated with the
implementation of the contract, the ability to neutralize
them and minimize the impact of risk on the
implementation of the contract;
 ability to plan actions over time, implementation
schedule;
 quality assurance plan, way of monitoring work progress,
reporting, implementation of repair plans;
 composition and organization of the team performing the
order, ways of coordinating the work.
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16.
Objectiveness
The concept of order fulfilment is non-measurable criterion.
Is it objective?
One of the rules of public procurement is that criteria should
be objective to ensure an objective comparison of the
relative value of the tenders (p. 90 of the preamble of the
Directive 2014/24/EU).
How to ensure objectivity of commission members?
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17.
Objectiveness
I believe, that in order to ensure maximum impartiality and
objectivity, the contracting authority should not disclose (if
possible) to the persons making the evaluation of offers:
 identity, name of the contractor;
 the name, brand of the product offered, the author of the
offer;
 offer price.
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18.
Fair competition
The concept of order fulfillment is non-measurable criterion.
Doesn’t it confer an unrestricted freedom of choice?
The chosen award criteria should not confer an unrestricted
freedom of choice on the contracting authority and they
should ensure the possibility of effective and fair competition
(p. 92 of the preamble of the Directive 2014/24/EU).
How to ensure effective and fair competition?
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19.
Fair competition
The criteria should be precise to the extent that ensures
uniform interpretation by ‘reasonably well informed and
normally diligent’ tenderer.
The criterion shall be interpreted in the same way by
practitioners involved in the type of activities covered by the
procurement in question.
The description of the criteria should communicate the
preferences of the procuring entity to the contractors and be
unambiguous enough to allow the contractor to adjust the
offer to these preferences.
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20.
Scoring offers in non-
measurable criteria
Very good example is the way used by Highways England.
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Approach
offered
How well do the proposals meet the contract requirements and
demonstrate an understanding of the risks to the work?
Mark
Weak
The approach has not considered fully the requirements of the
contract and fails to demonstrate appropriate cost and risk control.
1-4
Acceptable
The proposed resources and programme are adequate for the
methodology described, and risk management procedures are
acceptable.
5
Good
The proposals show a well thought out balance between the
resources required to carry out the work and the resources and
approach proposed to mitigate the risks to the work.
6-7
Very Good
The proposals include specific project initiatives which give a high
degree of confidence of completing the project within the time and
budget constraints and mitigating risks
8-9
Excellent
The proposals include highly innovative and specific project
initiatives which give a high confidence of completing the project
within the time and budget constraints and minimising risks.
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21.
Scoring offers in non-
measurable criteria
Good criterion for intellectual services may be „Critical analysis of the
assumptions” (which are developed by procuring entity and attached to ToR):
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Approach
tendered
How well does the offer meet the requirements of proper
implementation of the contract and maximises the probability
of achieving results?
No of
points
Weak
The offer does not fully take into account the requirements of the
ToR, does not identify errors in the assumptions or proposee actions
that would create them.
1-4
Acceptable
The offer is correct, confirms the analysis, but does not bring added
value to the assumptions.
5
Good
The offer shows a thorough analysis and contains some proposals
that add value to the project.
6-7
Very Good
The offer includes project-specific proposals based on the
contractor's experience, which add a significant value to the project.
8-9
Excellent
The offer includes highly innovative and project-specific proposals
based on the contractor's experience, which add a significant value
to the project.
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22.
Quality as measurable criterion
The quality of products can be understood in a different
ways, especially as technical or functional parameters.
To describe the criterion consisting of many sub-criteria
being technical and functional parameters, a table may be
used:
The description of the criterion formulated in the above
manner causes that technical parameters and functionality
become a measurable criterion. 21
parameter
description
growing /
decreasing
minimum
value
optimum
value
maximum number
of points

23.
Measurable criteria
The evaluation of offers in measurable criteria is carried out
by using a formula, an algorithm that allows for automatic
evaluation of offers. In the case of criteria described
numerically, e.g. the price of the offer is a necessary way of
assessing the offers.
There are many formulas that can be used to evaluate offers,
especially regarding the price of the offer.
The formula should reflect the ordering party's preferences
as faithfully as possible.
Not only the scoring of the offers depends on the adopted
formula, but above all the bid strategies adopted by the
contractors.
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24.
Scoring prices
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25.
How to develop weights
The contracting party may use one of methods supporting of
decision-making. Many methods are being developed that
could be used:
1) substitution method
2) The Analytical Hierarchy Process (AHP)
3) Electre methods (ELimination Et Choix Traduisant la Realia)
4) Promethee methods (Preference Ranking Organization
METHod for Enrichment Evaluations)
5) TOPSIS (Technique for Order Preference by Similarity to
Ideal Solution)
6) EVAMIX
The Analytic Hierarchy Process is a simple method that is
perfectly suitable for determining the weightings of criteria.24

26.
10 steps to the MEAT
Step 1. The criteria and their weights should be adjusted to
the justified needs of the procuring authority.
Step 2. The criteria based on non-verifiable contractors'
declarations should be avoided.
Step 3. Non-price criteria should be applied where it is
needed to select the MEAT.
Step 4. You should compare the Total Cost of Ownership (TCO)
rather than the purchase price.
Step 5. The criteria should differentiate.
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27.
10 steps to the MEAT
Step 6. To evaluate tenders in measurable criteria,
appropriate formulas should be used.
Step 7. Non-quantifiable criteria should be used if needed to
select the MEAT.
Step 8. Bids below the set minimum quality level should be
rejected.
Step 9. The weightings of criteria should be carefully selected,
preferably using decision support methods.
Step 10. Each time, the criteria and their weights should be
adjusted to the market conditions.
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28.
Thank You.
I wish You better procurements. In another way.
Dariusz Koba
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