In most tenders, the winner is chosen based on the lowest price, but this is not the only option — the procuring entity may indicate what they are willing to pay extra for. For example, if an entrepreneur puts a slightly higher price, but provides a longer warranty period or is located closer, their proposal may be more profitable than others.
The evaluation criteria that are not related to the price include:
- qualitative characteristics, including technical ones;
- appearance and functionality, accessibility for all users;
- social, environmental, innovative characteristics;
- qualification and experience of the contractor’s employees, if this can significantly influence the quality of works or services.
In the European Union, this list is not exhaustive. The procuring entity may reasonably establish other non-price evaluation criteria. Additional criteria can motivate suppliers to submit better proposals because such tenders consider their features and advantages.
In the EU, procuring entities are encouraged to evaluate tenders not only in terms of price, but also in terms of other criteria and life cycle cost. In 2021, the share of such procurement transactions reached 42%. But the member countries of the Union also face difficulties in introducing non-price criteria in public procurement because this is a rather complex mechanism.
In Ukraine, it is used in rare cases — in less than 1% of lots — and often incorrectly. In the study, in addition to describing European practice, we provided step-by-step examples to introduce non-price criteria in Ukrainian tenders. They will help procuring entities calculate truly favorable payment deferral and delivery terms, warranty extensions, and other non-price criteria.
This publication was prepared with the financial support of the European Union. Its contents are the sole responsibility of Transparency International Ukraine and do not necessarily reflect the views of the European Union.