Contract awarding
Encyclopedia
Contract awarding is the method used during a procurement
in order to evaluate the proposals (tender offers
) taking part and award the relevant contract. Usually at this stage the eligibility of the proposals has 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.
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.
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.
There are also many variants and/or combinations of these main methods.
Procurement
Procurement is the acquisition of goods or services. It is favourable that the goods/services are appropriate and that they are procured at the best possible cost to meet the needs of the purchaser in terms of quality and quantity, time, and location...
in order to evaluate the proposals (tender offers
Tender offer
Tender offer is a corporate finance term denoting a type of takeover bid. The tender offer is a public, open offer or invitation by a prospective acquirer to all stockholders of a publicly traded corporation to tender their stock for sale at a specified price during a specified time, subject to...
) taking part and award the relevant contract. Usually at this stage the eligibility of the proposals has 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.
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.
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.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.There are also many variants and/or combinations of these main methods.
see also
- ContractContractA contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...
- Contract theoryContract theoryIn economics, contract theory studies how economic actors can and do construct contractual arrangements, generally in the presence of asymmetric information. Because of its connections with both agency and incentives, contract theory is often categorized within a field known as Law and economics...
- Government procurementGovernment procurementGovernment procurement, also called public tendering or public procurement, is the procurement of goods and services on behalf of a public authority, such as a government agency...
- Public worksPublic worksPublic works are a broad category of projects, financed and constructed by the government, for recreational, employment, and health and safety uses in the greater community...
- Tender offerTender offerTender offer is a corporate finance term denoting a type of takeover bid. The tender offer is a public, open offer or invitation by a prospective acquirer to all stockholders of a publicly traded corporation to tender their stock for sale at a specified price during a specified time, subject to...