In the new Procurement Act the requirement to award to the Most Economically Advantageous Tender (MEAT) moves to Most Advantageous Tender (MAT). Will dropping the word ‘Economically’ make much difference to how public sector buyers assess tender responses?
The short answer is probably not. Most authorities have always had regard to the quality of the submission rather than racing to the lowest price alone, usually looking at a weighted mix of price and quality based on their organisation’s overarching strategy and objectives. The reason for this change to MAT is to stress to buyers that they should and may consider the whole package on offer of which price/affordability is one factor.
The Act also sets out other factors including maximising public benefit which further sends the message that the evaluation model should not be based on cost alone but include delivering wider government objectives through spending. The change from MEAT to MAT is not in practice significantly changing the way award criteria are set, tenders are assessed or contracts are awarded. It has been changed to highlight and reinforce the message that contracts do not have to be awarded on the basis of the lowest price or that price must always be weighted higher than quality.
What strategies are available to buyers looking to construct an evaluation model that outputs an award to the MAT, and what is an evaluation model anyway?
The most difficult part of developing a procurement pack for bidders to respond to is determining the evaluation model. The evaluation model will set out all the criteria against which bids will be assessed. The criteria must be relevant and capable of being assessed by the evaluation panel. Designing the model is at the core of a good procurement, working out which criteria are simply thresholds to be met (and so are binary pass/fail) and which are differentiators is one question – then weighting them is another.
When there is a mix of stakeholders with differing priorities it can be extremely demanding work for the buyer to facilitate agreement between the vying claims of importance – and pity the poor buyer who is buying for a consortium of public bodies with different strategic aims. Then there is the vexed question of how many criteria to deploy. Too many and the value of each is diluted, too few and key factors may be missed. And finally, how will price be evaluated? There are many strategies for this including relative price-scoring (Lowest Bid/Bid*weighting) which is widely used and arguably not compliant with regulation and certainly discouraged by the UK Government, to a quality-price ratio model and even pass/fail i.e. can you match the budget/financial envelope?
To develop an effective evaluation model the buyer will need to take an iterative approach, starting from the overarching organisational aims and the aims of the specific procurement. This will usually derive from organisational aims and result in a long list – the final stage is to determine which are conformance requirements and which could be scored, then working with stakeholders to determine relative importance and so weighting for each.
Price can be hard to weight, the buyer asking themselves how can we get the most effective solution, so ensuring quality and maximising value, whilst maintaining competitive tension? If price is too highly weighted then a mediocre bid may win (and that may be fine if it meets the specification, not every service is improved by silver or gold plating) if too lowly weighted then suppliers may be encouraged to price high potentially inferring from the low weighting of price that the authority’s priority is service quality regardless of cost.
Finally, the buyer needs a first-class specification of both service requirements and how performance may be measured – this is a necessary foundation on which the evaluation model and procurement rests.
Best practice will include testing the model against a number of scenarios and adjusting where such testing throws up unwanted outcomes.
Another conundrum is what happens if the bidders are all equal in quality, even if price is weighted low, if all bids score roughly the same then the lowest cost will win. If the criteria are right and the equal scoring reflects that all bidders can meet the requirements and provide the required value, then arguably this does not matter because you are awarding to MAT. Or buyers could take the view that where they expect the market to produce equally good responses to quality criteria, then they may increase the weighting of social value criteria to rebalance and encourage bids that maximise public benefit and are competitively priced. In this scenario, buyers may look to added value/innovation as the differentiator where that is likely to deliver real value to the authority.
In summary each procurement evaluation model must be fine-tuned to the needs of the Authority, the specific contract and the ability and capacity of the market. The Government Commercial Function provides excellent Guidance on evaluation including constructing models. It requires practical experience of tendering and deep understanding of the regulations to balance cost and quality in public procurement, without those conditions, evaluation models can produce awards that are not MAT because the weighting and criteria were not meticulously designed, tested and implemented.
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