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Procurement Perspectives: Balancing the best quantifiable bid against price

Stephen Bauld
Procurement Perspectives: Balancing the best quantifiable bid against price

The best acceptable bid (BAB) approach, which balances quantifiable cost with a range of other key considerations in terms of overall value-for-money, is used in the municipal administration process.

The BAB system of evaluating bids introduces an element of subjectivity into the decision-making process. For this reason, it must be employed with adequate safeguards to ensure it is exercised in the proper manner.

However, a BAB approach also allows the bid evaluation team to consider all pertinent factors, rather than just cost, so that the public expectation that the supplier offering the best overall value will receive the contract is actually furthered as a result of its adoption.

The integrity of the system is furthered maintained by advance disclosure of the evaluation criteria.

Such criteria should be settled with the ordering department ahead of the publication of the request for an RFP.

The relative weighting of criteria should also be settled and that too should be publicly disclosed. Indeed, where a RFP process is being used, it is essential that this be done.

In most cases, it will be found that the bidder who submits the lowest bottom line price is also the bidder who qualifies with the BAB.

When the contract is awarded to another supplier, it is usually wise to invite the unsuccessful low bidder to meet with a representative of the purchasing department before any controversy boils to the surface.

At that meeting, it is possible to go over the scoring criteria and explain how the contract decision was reached.

Even if the unsuccessful supplier does not agree, by providing such a meeting the purchasing department will have evidence that they have been open and above board in their dealings.

In addition to price related concerns that factor into BAB calculations, a number of more controversial considerations often influence municipal procurement decisions.

While there is nothing inherently wrong in taking these factors into account, considerable caution should be exercised when relying upon them because they can often serve as a cover for an improper preference.

Considerations of this issue include the following.

The amount of local content. Since municipal government is locally based, there is a strong incentive among politicians to forward business that is based in the community the politicians serve. A purchase from a local supplier can easily be characterized as an investment in the community.

Unfortunately, as discussed in previous articles, there are serious legal concerns when attempting to confer a local preference. Moreover, there are commercial considerations as well that militate strongly against doing so.

To fund a more expensive purchase, it will be necessary to increase the tax burden on that same community. Time and again public procurement at all levels of government, that increased burden has been found to exceed the benefit derived from favouring local supply. The more influence that local preference plays in procurement, the more the municipal administration exposes itself to the risk of political interference.

There can also be considerable difficulties in deciding what is local, particularly when one considers that at the municipal level so many workers commute out of the jurisdiction to their place of work.

In an effort to mitigate these risks, some municipalities have gone as far as to state that local content will have no influence on the award of a contract.

All of these things being equal, it is difficult to see why a local supplier should not be preferred, particularly since there are advantages in terms of reliability in securing a local source of supply.

There is a benefit in employing suppliers who have a proven track record of successful delivery and good reputation within the business community for integrity and competence.

No one would suggest it would be a good idea to work with suppliers with a poor reputation.

Stephen Bauld is a government procurement expert and can be reached at Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.

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