Scottish procurement policy handbook

5 Value for money

The overarching aim of public sector procurement activity in Scotland must be the achievement of value for money ¹⁵ for the taxpayer. Value for money is defined as the optimum combination of whole-life cost and quality (or fitness for purpose) to meet the user's requirement. Depending on the nature of the contract, whole-life cost may include implementation costs, ongoing operating costs and end-of-life disposal.

Regulation 30 of The Public Contracts (Scotland) Regulations 2006 sets out two methods for evaluating tenders: contracting authorities can award contracts on the basis of the most economically advantageous tender or the lowest price. In determining the criteria for the award of contracts, purchasers should rarely rely on price alone. This is because awarding contracts on the basis of the most economically advantageous tender allows purchasers to balance the quality of the goods, services and works they are procuring against price and to frame specifications in a way which encourages innovation rather than defining the solution. Appropriate investment appraisal techniques should be used in assessing which compliant bid offers best value for money.

As part of value for money, due regard to other relevant organisational policies is important, for example, policies in relation to corporate social responsibility/sustainability.