Procurement in a Nutshell: Guidance – Assessing Competitive Tenders
25th July, 2024
This Nutshell will evaluate the recently published guidance on how contracting authorities ought to determine the most advantageous tender (MAT) following a competitive tendering procedure.
On 26th October 2023 the Procurement Bill received Royal Assent and is now expected to come into force on 28th October 2024.
The Act will, in particular, revoke the following:
- Public Contracts Regulations 2015 (PCR)
- Concession Contracts Regulations 2016
- Utilities Contracts Regulations 2016
You can find a copy of the guidance here.
Key points
The linguistic change from the ‘most economically advantageous tender’ under the PCR to the ‘most advantageous tender’ (MAT) under the Act seeks to clarify and reinforce for contracting authorities that tenders do not have to be awarded on the basis of lowest price/cost.
Throughout the procurement, contracting authorities must have regard to the objectives set out in Section 12 of the Act. The guidance stresses that maximising public benefit, delivering value for money and the duty to mitigate barriers to participation for small and medium-sized enterprises (SMEs) are of particular relevance when designing and applying the award criteria.
The guidance states the following points in relation to Section 12:
- in complying with the duty to have regard to SMEs, contracting authorities should not create an award criteria that are prohibitive, or set timescales in the procedure that do not give suppliers sufficient time to prepare quality tenders; and
- value for money is securing the optimal whole-life blend of economy, efficiency and effectiveness that achieves the intended outcomes of the procurement. In order to achieve this, a contracting authority should take life-cycle cost into account when designing specifications, award criteria and other requirements.
Contracting authorities must also consider the National Procurement Policy Statement (as stated in Section 13) when assessing tenders.
Award criteria
The key requirements for award criteria are:
- they must relate to the subject-matter of the contract;
- they must be sufficiently clear, measurable and specific;
- they must comply with the rules on technical specifications;
- they must be a proportionate means of assessing tenders having regard to the nature, complexity and cost of the contract.
Ultimately, contracting authorities must focus on the particular procurement in question and properly assess each tender in respect of what is being procured. Contracting authorities may assess tenders against a wide range of factors such as price, quality and technical criteria in addition to wider social, economic and environmental issues as long as such factors relate to the subject-matter of the contract.
The process of awarding contracts must be transparent. Contracting authorities are obligated to publish the award criteria and the assessment methodology in the Tender Notice when initiating the competitive tendering procedure. If there is more than one criterion, the contracting authority must also set out the relative importance of all the criteria.
Conditions of participation
Conditions of participation are used to determine whether a supplier is capable/suitable to perform the contract. This is distinct from the award criteria, which determines the merits of the supplier’s tender. Conditions of participation must only relate to the supplier’s legal and financial capacity or technical ability to perform the contract.
Refining the award criteria (Section 24)
If a contracting authorities seeks to refine the award criteria during the Competitive Flexible Procedure, they must provide for this possibility in the Tender Notice or associated tender documents and may only refine the award criteria before inviting final tenders.
Contracting authorities can only refine what has already been provided; they cannot add new criteria. In addition, contracting authorities cannot make a refinement that would, had the refinement been made earlier, have allowed one or more suppliers that did not progress beyond an earlier round or selection process to have done so.
Contracting authorities must republish the Tender Notice and any associated tender documents affected by the refinements.
We will be evaluating the requirements in relation to modifying a competitive procurement in more detail in our next Nutshell.
What does this mean?
The Act affords contracting authorities the freedom to design their own award criteria when engaging in a competitive tendering procedure. Contracting authorities must have regard to the key objectives of the Act, and must ensure that when assessing tenders, they focus on the particular procurement in question and warrant that any criteria relates to the contract being awarded.
For further information please contact Melanie Pears or Tim Care in our Public Sector Team.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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