Contract awarding is the method used during a
procurement
Procurement is the method of discovering and agreeing to terms and purchasing goods, Service (economics), services, or other works from an external source, often with the use of a tendering or competitive bidding process. When a government agenc ...
in order to evaluate the proposals (
tender offer
In corporate finance, a tender offer is a type of public takeover bid. The tender offer is a public, open offer or invitation (usually announced in a newspaper advertisement) by a prospective acquirer to all stockholders of a publicly traded corpo ...
s) taking part and award the relevant contract. Usually at this stage the eligibility of the proposals have been concluded. So it remains to choose the most preferable among the proposed.
There are several different methods for this, which are obviously related to the proposition method asked by the procurement management.
Methods
Least price
This method is the simplest and oldest of all. Under this the procurement contract is awarded to the best price.
Some relevant methods are these of examining the overall or in parts and in total discount in a given price list or on a given budget. One of the proposed for Public tenders by the
EC.
Most economically advantageous
This is applicable to proposals of different quality within the limits set. Under this the proposals are graded according to their price for value and the contract is awarded to the one with the best grade.
Similar to this is the grading of the proposals according to time, making the proposals needing less time of implementation seem more valuable. One of the proposed for Public tenders by the
EC.
2004/18/EC article 53§1a Directive on the coordination of procedures for the award of public works
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Mean value
The contract is awarded to a bid closer to the mean value of the proposals. This may apply to procurements where numerous proposals are expected and there is a need for a market-representing value.[https://docs.google.com/viewer?a=v&q=cache:CqYPIPindWUJ:faculty.kfupm.edu.sa/CEM/bushait/Research/Bid-awarding-systems-An-overview.pdf+bid+awarding&hl=en&gl=gr&pid=bl&srcid=ADGEESibn36p3prl52ZmY2gy2gi8Rq3RlbzBfw6nq1orsyjQxPqYOH7idi-YQcji4IVdIoMsDx_H9lc8yZ7P5hB6rgDYeoAp-kHN_SQ7Uwzf6qSUw1K3bndY22EeoPehb-UPu_i_B4IX&sig=AHIEtbQn8TVyZu7SORNqDnOmLXj5BCsfmA Bid awarding systems - an overview]
Exclusion of the extremes
Under this method the proposals that are deviating the most from the mass of the proposals are excluded and then the procedure continues with one of the above methods.
See also
*Contract
A contract is a legally enforceable agreement between two or more parties that creates, defines, and governs mutual rights and obligations between them. A contract typically involves the transfer of goods, services, money, or a promise to tran ...
*Contract theory
From a legal point of view, a contract is an institutional arrangement for the way in which resources flow, which defines the various relationships between the parties to a transaction or limits the rights and obligations of the parties.
From an ...
*Government procurement
Government procurement or public procurement is the procurement of goods, services and works on behalf of a public authority, such as a government agency. Amounting to 12 percent of global GDP in 2018, government procurement accounts for a subst ...
*Public works
Public works are a broad category of infrastructure projects, financed and constructed by the government, for recreational, employment, and health and safety uses in the greater community. They include public buildings ( municipal buildings, sc ...
*Tender offer
In corporate finance, a tender offer is a type of public takeover bid. The tender offer is a public, open offer or invitation (usually announced in a newspaper advertisement) by a prospective acquirer to all stockholders of a publicly traded corpo ...
*Contract Management Contract management or contract administration is the management of contracts made with customers, vendors, partners, or employees. Contract management includes negotiating the terms and conditions in contracts and ensuring compliance with the terms ...
References
{{Reflist
External links
European Commission - Public Procurement
Law and economics
Government procurement