When we procure contracts on behalf of public sector clients, the contract award criteria must be clearly set out in the tender documents. But just how detailed do they need to be? Ridge public procurement expert Janet Volkaerts looks at how to get the balance right.

Ridge has procured hundreds of contracts for public sector clients in a range of sectors, working alongside their procurement departments. In our experience, clients’ interpretation of the level of detail that needs to be provided varies considerably, particularly with regard to quality evaluation. So, what is the right level of detail?

The regulatory context

Currently, contract award criteria are covered by Regulation 67 of the Public Contract Regulations 2015. Regulation 67(6) says the award criteria “shall not have the effect of conferring an unrestricted freedom of choice on the contracting authority”.

Regulation 67(7) states that the award 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”. This means the criteria must be clearly defined and include enough detail to allow an objective comparison of the relative merits of all the tenders.

Contract award criteria typically look at price and quality to make sure the contract is awarded to the “most economically advantageous tender” (MEAT). However, in the new Procurement Act, this will now be known as the “most advantageous tender” (MAT) to avoid the emphasis on price.

Scoring the tenders

Tender documents indicate how much weighting is given to quality in relation to price; for example, 70% quality to 30% price. The price score is then determined by the rates or prices submitted.

The quality score is based on answers to the tender questions, which must be clearly linked to the subject matter of the contract. They may refer to qualitative, environmental or social aspects of the project, method statements and examples of relevant experience.

Ultimately, the contracting authority is required to provide an unsuccessful tenderer with information about the reasons for its rejection, so the evaluation criteria must be transparent.

Defining quality criteria: too much information?

In our experience with public sector procurement departments, we have encountered two extreme interpretations of how quality evaluation criteria are defined.

The first is when each tender question sets out its preferred requirements and explains everything the client is looking for in a response. In this way, the client makes sure there are no sub-criteria or undisclosed criteria. While this may reduce the risk of challenge by unsuccessful tenderers, the downside of this approach is that it can amount to giving tenderers a model answer that does not sufficiently test them. How can you tell if a tenderer is competent if they have been spoon-fed the desired answers?

For example, if we were to ask a social housing contractor how they would deal with vulnerable residents, we shouldn’t have to tell them that we’ll score them based on how they deal with people who are visually impaired, the hard of hearing, those for whom English isn’t a first language or wheelchair users. A competent contractor should know the different types of vulnerable residents. A contractor that addresses all types of vulnerabilities should be given a higher score than one that just addresses the basics.

Essentially, if the criteria list is too comprehensive, it simply becomes a prompt sheet and tenderers can cover all the points without applying any expertise. It’s then easy for them to secure an artificially high score. There is a risk of all tenderers scoring similar marks, undermining the selection process.

Lack of clarity increases the risk of challenge

The other extreme we have encountered is where the stated quality evaluation criteria are limited to a high-level summary of the scoring, but don’t set out the requirements for each individual question. Instead, the client decides in advance what they would expect the responses to cover, and scores are based on the extent to which tenderers comply with expected responses.

Here the emphasis is on testing tenderers to see what they produce, without giving them an indication of preferred requirements to base their answer on. While this approach may be effective in separating more competent tenderers from the rest, in our experience it results in very varied responses, as tenderers can interpret questions differently. This makes objective comparison of tenders – and ultimately the selection process – more difficult.

The risk of challenge to the client also increases, if the feedback states that a requirement wasn’t covered but the original question didn’t clearly specify this as a requirement. For example, in a question asking how a contractor would manage subcontractors, some tenderers may interpret this as only applying to post-contract issues, such as inductions, inspections or performance monitoring. However, the client’s ideal answer may also include how subcontractors are vetted prior to appointment. In this case, would it be fair to penalise a tenderer that has interpreted “management of subcontractors” to mean “management of subcontractors’ work during the construction”? The risk of challenge could have been reduced through a clearer explanation of the scope of the quality criteria.

Another problem with this approach is that tender method statements often become a contract document setting out a commitment from the contractor. If the criteria have not been clearly defined, it is possible that the successful tenderer has submitted answers that misinterpreted the question, limiting the effectiveness of the resulting contractual document.

Taking a balanced approach

The most effective tendering process avoids these two extremes. To test the competency of tenderers effectively, the contract award criteria should not give chapter and verse on the ideal answer. However, to ensure a transparent scoring process and avoid challenges, clients must be careful to set clear contract award criteria in tender documents. There should be no ambiguity about what the tenderers need to cover. It is just a case of getting the balance right.

Janet is a public procurement expert in our Cost Management team. If you’d like to get in touch, you can email JVolkaerts@ridge.co.uk