When are the conditions for participation, evaluation criteria and methodology developed?
The conditions for participation, evaluation criteria and methodology should be developed before the Request for Quotation/Tender is prepared.
It is good practice to document the conditions for participation, evaluation criteria, evaluation methodology and the parties involved in an evaluation plan.
Developing conditions for participation and evaluation criteria
What are conditions for participation?
Conditions for participation are the minimum mandatory conditions that potential suppliers must meet in order for their submission to be considered. These requirements are assessed as either being 'met' or 'not met' by a supplier in the first stage of evaluation of their submission.
Non-conformity with conditions for participation will eliminate a supplier from further consideration. Therefore it is important to carefully consider what, if any, conditions should be mandatory.
The conditions for participation should be clearly marked as mandatory requirements and the Request documentation should clearly indicate that a failure to comply with the requirements will eliminate the supplier from further consideration.
What are evaluation criteria?
Evaluation criteria are standards that are used to assess how well an offer meets the agency's requirements. They provide a mechanism for comparing offers by assessing the relative worth of different offers.
How do I develop the conditions for participation and the evaluation criteria?
The conditions for participation and the evaluation criteria you select will depend upon the nature of the purchase and in particular, your agency's needs and requirements relating to the specific purchase.
Generally, conditions for participation will include such matters as -
- solvency and financial viability;
- mandatory insurance policies/levels;
- relevant licences;
- professional accreditations or registrations; and
- prequalification or pre-registration requirements.
Various free trade agreements limit what can be included as a condition for participation therefore if your procurement is impacted by the agreements, you should also refer to the Free Trade Agreement Guideline.
Generally, the evaluation criteria will address such matters as -
- compliance with contractual terms and conditions;
- the technical merit of the goods or services offered;
- the capability of the bidder to fulfil the requirement, including technical and management competence, financial viability, relevant skills, experience and availability of key personnel;
- whole-of-life costs;
- the risks or constraints associated with the offer;
- any wider benefits to the State (eg local employment opportunities and environmental considerations); and
- any mandatory criteria, such as those required by Instruction 1119.
It is important that the information requested from suppliers is sufficient to enable proper evaluation and comparison of offers. It is useful to document the information to be provided by suppliers in a Quotation/Tender Form. This will ensure that the information provided by each supplier is complete and provided in a consistent format, assisting you in the evaluation process.
Developing an evaluation methodology
The evaluation methodology selected should enable you to objectively determine which quotation offers best value for money by addressing:
- conformity with conditions for participation (mandatory requirements) - a "yes/no" or "met/not met" response;
- an appropriate level of conformity with non-mandatory compliance requirements such as compliance with contractual terms and conditions;
- the degree to which a quotation meets desirable non-cost or qualitative criteria;
- whole-of-life costs; and
- the level of risk associated with selecting a particular quotation.
Examples of three different evaluation methodologies are provided below.
Least cost methodology
The "least cost" methodology is useful for simple low-cost purchases. It simply involves selecting the lowest price response that meets all of the essential conditions.
Numerical scoring methodology
This methodology is useful for evaluating moderately complex purchases where each of the desirable qualitative (non-cost) evaluation criteria are of equal importance.
After screening out those offers that do not comply with the conditions for participation, a numerical rating is allocated against each qualitative (non-cost) evaluation criterion depending on the supplier's level of compliance (note that cost is not scored, but is considered as part of the value for money assessment).
The scores are totalled and a value for money assessment is then made comparing the total scores, whole-of-life costs and associated risks.
A typical scoring system might be:
Full achievement of the requirements specified in the RFQ/RFT for that criterion. Demonstrated strengths, no errors, weaknesses or omissions.
8 to <10
Sound achievement of the requirements specified in the RFQ/RFT for that criterion. Some minor errors, risks, weaknesses or omissions, which may be acceptable as offered.
6 to <8
Reasonable achievement of the requirements specified in the RFQ/RFT for that criterion. Some errors, risks, weaknesses or omissions, which can be corrected/overcome with minimum effort.
4 to <6
Satisfactory achievement of the requirements specified in the RFQ/RFT for that criterion. Some errors, risks, weaknesses or omissions, which are possible to correct/overcome and make acceptable.
2 to <4
Minimal achievement of the requirements specified in the RFQ/RFT for that criterion. Several errors, risks, weaknesses or omissions, which are possible, but difficult to correct/overcome and make acceptable.
>0 to <2
Poor to deficient
No achievement of the requirements specified in the RFQ/RFT for that criterion. Existence of numerous errors, risks, weaknesses or omissions, which are very difficult to correct/overcome and make acceptable.
Totally deficient and non-compliant for that criterion.
Weighted scoring methodology
This methodology is useful for evaluating purchases where the evaluation criteria are of differing importance.
After screening out those offers that do not comply with the conditions for participation, each evaluation criterion is allocated a percentage weighting adding up to 100 per cent in total. The weighting allocated to each criterion should be disclosed in the Request documentation. Care needs to be taken to assign meaningful relative weightings.
When evaluating the offers, each qualitative criterion is allocated a score. See numerical scoring above for a typical scoring system. Only those offers that meet all conditions for participation are scored.
The score is then weighted, which is calculated by multiplying the weighting factor by the score. The weighted scores can then be totalled, allowing for comparison between offers. There are a number of methods to calculate weighted scoring, one example is contained in the Quotation Evaluation and Probity Plan (standard) template.