Monday, December 7, 2009

Qualifications and Price as Selection Criteria

In selecting a consultant, service provider, or contractor (under certain alternative public works contracting methods), both qualifications and price are important evaluation criteria.

It is an art form to determine, on a case-by-case basis, how to weight the points between qualifications and price.

Leaning Toward Qualifications: If the number of points is too heavily weighted toward qualifications, a public agency will get the most qualified firm, but may end up paying more for the service than could be obtained in a more competitively structured solicitation. This would occur, for example, if qualification related criteria was worth 85 points, while price was only worth 15 points.

Leaning Toward Price: On the other hand, if the number of points is too heavily weighted toward price, a company can essentially buy the contract by submitting a low price, even though they may not be the most qualified firm. This would occur, for example, if the points were reversed from the above example, and qualifications were only worth 15 points, but price was worth 85 points.

Factors to Consider: In making decisions on how to most appropriately allocate the weighting of the evaluation criteria, it is important to think about the following:
  • What type of service you are attempting to procure.
  • The local market and who is likely to bid or propose. Are the firms all qualified?
  • The relative importance of qualifications versus price in meeting your agency's objectives.
  • Is the project on a very tight budget?
  • Is the agency willing to pay more because of the critical need to obtain the most qualified firm?
Qualifications Based Selection: In selecting certain professional services, remember that many government agencies have laws that prohibit the use of price as a selection criterion when selecting architects, engineers, landscape architects, land surveyors, and other licensed professions.

For example, in the State of Washington,
chapter 39.80 of the Revised Code of Washington mandates a Qualifications Based Selection (QBS) process for these disciplines without using cost as a selection criterion. Likewise, the federal government's Brooks Act is also a Qualifications Based Selection process where price may not be used as an evaluation criterion.

Price as the Only Criterion: Other than these regulated professions, many laws require that price be either part of the selection criteria or, particularly in the case of goods and supplies and most public works, often the entire basis on which selection is made.

Alternative Public Works Contracting: In the State of Washington, three alternative public works contracting procedures (Design-Build, Job Order Contracting, and General Contractor/Construction Manager (GC/CM)) require selection partially based on qualifications and partially based on price. See chapter 39.10 RCW for more information or contact me.

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