Scottish procurement policy handbook

5. Value for money

For Regulated Procurements, contracts should not be awarded on the basis of lowest price only, and contract award criteria must be specifically designed to assess and award on the basis of VfM. The award stage will identify which of the eligible tenders will deliver best VfM. This is established using the Most Economically Advantageous Tender (MEAT) contract award criteria. It is Scottish Government policy that all Regulated Procurements are awarded based on MEAT, as well as a legal requirement for all contracts awarded in accordance with the 2015 Regulations, the Utilities Contracts (Scotland) Regulations 2016 and the Concession Contracts (Scotland) Regulations 2016. Unregulated contracts should be awarded in line with the relevant public body’s internal guidance.

In addition to the quality of products and services, Procurement Officers must also consider factors such as the Sustainable Procurement Duty (please see the Sustainable Procurement sections in this handbook for further detail). In this context, Whole Life Costing and Life Cycle Costing should also be considered.

Procurement Officers must also be mindful of abnormally low tenders. Where a tender appears to be abnormally low, the price being proposed must be clarified by the Procurement Officer to ensure that it is valid and sustainable, and is not a result of a breach of applicable environmental, social or labour law obligations. For more information on abnormally low tenders please see the Procurement Journey for goods and services contracts, or for works contracts see the Client Guide which includes a tool to help identify potentially abnormally low tenders.

Public bodies should set out how they plan to deliver VfM through procurement in their commodity/service strategy.

They can achieve VfM by:

• fully involving people whom the goods/services/works will have an impact on to ensure their needs are being met and to minimise unintended consequences
• understanding the marketplace and supporting a collaborative approach to the market where appropriate
• seeking out opportunities for innovation
• selecting the appropriate route to market, applying fair, open and transparent duties to processes as appropriate
• utilising an effective and efficient contract & supplier management approach.

Further tools and support are available to help public bodies analyse spend and identify savings through the Scottish Procurement Information Hub and procurement benefits reporting guidance.