Award criteria
When tender documents are published, an experienced B2G seller's eye goes straight to one place: the award criteria. They are the heart of the whole tender and the rules that define the mathematics by which the winner is finally chosen.
In public procurement, decisions are never made "on a hunch". The Procurement Act obliges the buyer always to choose the most economically advantageous bid. Although the term sounds like mere price-squeezing, it conceals several strategic dimensions a bidder should understand.
Three routes to the most economically advantageous tender
A contracting authority can define economic advantage in three different ways. A bidder's first task is to work out which game is being played:
1. Lowest price
This is the most straightforward and most merciless of the criteria. If the buyer has defined the subject matter exactly (a certain number of standard monitors, for example), the comparison is made on the price tag alone. The bidder's strategy is then purely about optimising the cost structure.
2. Cost-effectiveness (life-cycle costs)
The purchase price alone often does not tell the whole truth, especially with software or equipment. The life-cycle cost model (TCO, total cost of ownership) takes long-term costs into account.
- What does this mean for a seller? The buyer compares, for example, the cost of the installation project, monthly licence or maintenance fees, running costs and even recycling costs after the device's life ends. If your service is expensive to buy but cheap to maintain, this way of comparing favours your solution.
3. Best price-quality ratio
This is the most common and most complex criterion in consulting services, IT procurement and large projects. The buyer sets weights for price and quality (price 60 % and quality 40 %, for example). In this model a bidder can win even at a higher price, as long as the quality points make up the price difference.
Hunting quality points: what is quality really?
Quality is a subjective concept, but in public procurement it has to be measurable. The Procurement Act gives the buyer wide latitude in defining quality, as long as it is done properly. Quality points can be awarded for things such as:
- Technical merit and usability: How the software's interface serves the end user, or how accessible it is.
- The qualifications of the experts: The project manager's or the team's CV, years of experience and earlier comparable assignments — provided the named team genuinely affects the outcome of the work.
- Environmental and social factors: The service's carbon footprint or employment conditions.
The buyer's constraints (a seller's checklist)
When you read the award criteria, you also act as the buyer's quality controller. The Procurement Act sets strict rules for award criteria. If the buyer breaks them, the tender documents may be unlawful:
- They must relate to the subject matter: The buyer cannot award extra points because your company has a fine office or a well-known board, unless that relates directly to producing the service being bought.
- No unlimited freedom of choice: The criteria may not be arbitrary. "Good usability" is an unlawful award criterion unless the buyer has defined precisely how usability is measured and scored (user testing with specific tasks announced in advance, for example).
- Openness and non-discrimination: All award criteria, their sub-weights and the calculation formulas must be stated clearly in the tender documents so that every bidder starts from the same line.
Concessions as an exception: In a concession (a service where the company gets the right to charge end users directly, for example), the rules for comparing quality and price are somewhat more flexible. The points need not be weighted with equally exact mathematics, but the selection criteria must still be objective and safeguard genuine competition.
Turn the award criteria into a sales strategy
A winning bid does not come from answering questions but from understanding the mathematics of the scoring. Before you start writing, simulate different scenarios. If price carries 80 % of the weight, fine-tuning individual quality points is often a waste of time — the game is decided in Excel. If quality carries 60 %, offering a low price with a stripped-down expert team rarely wins.
The best sellers do not settle for reading the award criteria, however. They influence them by taking an active part in market dialogues and by proposing to buyers the kind of qualitative criteria that bring out the unique advantages of their own solution before the final tender documents are even published.
Frequently asked questions
What are award criteria?
The criteria announced in advance in the tender documents by which the winner is chosen. The Procurement Act requires the most economically advantageous tender to be chosen by one of three routes: lowest price, cost-effectiveness (life-cycle costs) or the best price-quality ratio.
Can a more expensive bid win a tender?
Yes. In the best price-quality ratio model, price and quality are given weights (price 60 % and quality 40 %, for example), so higher quality points can make up the price difference.
What earns quality points?
Measurable factors relating to the subject matter: technical merit and usability, the qualifications and experience of the named team, and environmental and social factors, for example.