Review participants recognise the efforts of framework providers to create a balance of cost and quality evaluation criteria. However, they express concerns that balanced evaluation can become skewed, and resources can be wasted, where:
■ Quality differentials are marginal and lowest cost becomes the key criterion
■ Quality criteria are subjective and not easily understood
■ Qualitative proposals are requested which are not relevant to the client's needs
■ Qualitative proposals are not implemented or kept under review for later adoption.
A persistent supplier concern is that financial criteria inevitably dominate an evaluation procedure and tempt bidders to undercut each other's prices regardless of other criteria. Overcoming this problem requires framework providers and clients to make clear their expected framework outcomes, their priorities and their definition of value in ways that bidders can respond to in their qualitative bid proposals. It requires sufficient weighting to be given to qualitative criteria and a deeper analysis of ways in which to avoid unrealistic responses to cost criteria.
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The Housing Forum report 'Stopping Building Failures' recognises how building safety is jeopardised by the lowest price 'race to the bottom', and considered evaluation models that could reduce the risks of unrealistic pricing: ■ The 'optimum pricing model' in which the contracting authority sets out the optimum price which it considers appropriate for the contract, based on market research. The tenderer is then incentivised to make the effort to reach the optimum price without undercutting it. The tenderer closest to the optimum price receives the highest mark. This should protect against abnormally low bids but arguably curbs the potential for truly innovative approaches' ■ 'The 'fixed price model' where the contracting authority fixes the price for the contract and then undertakes a value for money evaluation on the non- price element of the contract's delivery, such as the quality and experience of the team, choice of materials, health and safety standards, liaison with residents, or environmental and social aspects of the project. By fixing the price and considering alternative value for money proposals, the contracting authority will again be neutralising the effect of any abnormally low bids on the overall evaluation'. |