Performance criteria will become one of procurement’s biggest issues in 2020. It has already changed the course of the way tenders and RFPs are evaluated by public sector.
As standard practice, a proper method of scoring must consider the requirements and expectations of the ordering department within the municipality, as well as the more formalistic and uniform expectations of the purchasing department itself.
Contractors/suppliers should also be consulted in the process of formulating performance evaluation criteria, to ensure the criteria selected are realistic. Important pervasive considerations include the following:
The criteria selected should have a bearing on the value to the customer (the municipality) of the supply that is being made. For instance, a timely supply of items that are consumed at a predictable rate in the ordinary course of municipal activity is clearly essential, since the value of supply is obviously adversely affected if the items in question are not there when required. On the other hand, while timelines will always have some value, for other types of commodity, it is nowhere near as critical a consideration.
Appropriate weightings should be given (i.e., weight given to each criterion should be relevant to the type of good or service that is being supplied). One should look at the most significant components for the item that is being supplied, and identify a way of determining whether the supplier’s performance is driving these costs up or down.
The criteria that is to be measured should be one which comparable data is relatively readily available.
It is better to measure a few select criteria well (logically, these being the most relevant criteria), than to measure a wide range of criteria poorly. The criteria selected must be understandable. A focus on a few critical considerations, which are tied to the municipality’s strategic objectives, will lead to a system that is readily understandable and effective.
The results obtained through measurement should allow meaningful comparison of a supplier against its competitors, and against some overall standard of acceptability.
Unfortunately, often it is only during the process of bid evaluation that fundamental flaws will be discovered in the evaluation criteria. This problem breaks down into four sub-classifications:
- Important requirements were left out of the specifications;
- specifications are redundant;
- specifications included in the process prove to be irrelevant to functionality; and
- the criteria of assessment are far too detailed.
The problems that are most frequently encountered during Bid Evaluation include the following:
- The weighting of evaluation criteria is unrealistic.
- There are too many criteria of assessment.
- The criteria of assessment are so subjective, that it is difficult to reconcile or justify the approach that evaluators have taken towards scoring.
To rectify the problem, people will often try to adjust the evaluation process, so that the problems with the specifications are negated. This presents both legal and corporate governance concerns. Accordingly, it is impossible to over-stress the need to take great care with the specifications for the Project. However, there are also problems that are peculiar to the evaluation process itself, and it is to those problems that become the issue.
Bid evaluation relates to the award of very high (or low) grades to one bidder and exceptionally low (or high) to another. The concern is such cases is the appearance of bias — an appearance that is likely to be confirmed if the person giving the scores concerned is unable to furnish a creditable basis for the scores given, when and if they are called into question.
Where a “must” system is employed, the highest scoring bid will receive the full points available in any category. In all other cases, a score near perfect would be especially hard to justify on cross-examination — an ever-present risk, given the litigious nature of public procurement.
Stephen Bauld is a government procurement expert and can be reached at email@example.com.
Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.