3.2.5  Define bid evaluation criteria

The EU procurement regime allows some flexibility regarding the criteria that can be used to evaluate bids and select the preferred bidder. The broad aim is to select the "most economically advantageous tender.

The choice of criteria for scoring and ranking alternative competing bids is a key decision in procuring a PPP. The objective is to tailor the contract award criteria to the particular project and contract terms to achieve the best possible results (Value for Money). <1>

Failure to apply award criteria properly can be a source of challenge to the procurement outcome. The public authorities should, therefore, always take appropriate advice before the bid evaluation criteria are finalised.

As a rule, award criteria (and the weighting to be applied to each criterion) should be specified in advance. This may be problematic in the case of a competitive dialogue procedure where detailed award criteria are rarely known in advance. In this instance, EU law allows that the criteria be listed in decreasing order of their importance. In either case, the award criteria must appear in the contract notice or the descriptive document and may not be changed during the award procedure.

Some examples of criteria include:

□  the lowest tariffs, service fee or level of grant or subsidy;

□  the  largest payments to the  public authority (up-front or periodic), including the level of tariffs or service fee;

□  the shortest duration of the PPP (before handing the assets over to the public authority); or

□  the best promised performance, in terms of a key objective indicator, such as service coverage, year by year.

There are a number of examples of imaginative use of award criteria to achieve particular objectives, for example, the Least Present Value of Revenue criterion in toll motorways (pioneered in Chile). In this case, the concession ends once the concessionaire has received cumulative revenue whose net present value equals the value it has bid. This is a way of combining a criterion based on the lowest remuneration with a mechanism for transferring traffic risk to the public sector. <2>