Procurement Division

1
Procurement Division

• Evaluation by Best Value for Money Methodology

2
Best Value for Money

• Best value principle as per UN Financial
  Regulations Rules 5.12
• Due consideration when exercising the procurement
  function
• Move from a principle to a method to apply best
  value in procurement
• Best value in procurement is a practice used
  world wide in public and international
  procurement operations
• Best value method involves all procurement
  stakeholders
• Requisitioner
• Procurement Staff
• LCC
• HCC
• Contract Approving Authority

3
Best Value for Money

• Requisition must describe the goods and/or
  service in terms of functionality, deliverable,
  business solution
• No specification or how to do it Must be
  outcome based
• Procurement under best value for money method is
  based on pre-established criteria for evaluation
  with weighted scores assigned to technical and
  commercial evaluation
• Information about criteria is communicated to the
  vendors at the solicitation phase
• Range assigned to technical evaluation varies
  from 40-50-60 and 60-50-40 is assigned to
  financial / commercial evaluation
• Allocation is determined by market structure,
  objectives to achieve, professional judgment and
  risk assessment

4
Best Value for Money

• After receipt of proposal, technical evaluation
  is conducted by a team of staff from the
  requisitioning office(s)
• Based on the pre-established criteria, technical
  offers are rated with points assigned to each
  category of criteria
• The best technical offer receives the highest
  score

5
Best Value for Money

• For example, technical evaluation of specific
  equipment may include evaluation criteria such
  as
• Pass or Fail (ISO certification)
• Delivery lead time (15 points)
• Fuel consumption rate (20 points)
• Warranty conditions (15 points)
• Noise level (10 points)
• Power capacity output (15 points)
• Global support for spare parts (25 points)
• Total 100 pts and will count for 60 of the
  overall evaluation

6
Best Value for Money

• Financial evaluation is conducted by the
  Procurement Division upon completion of technical
  evaluation
• Lowest priced offer is given the maximum number
  of points. All other financial and commercial
  elements receive points in inverse proportion
• Total 100 pts and will count for 40 of the
  overall evaluation

7
Best Value for Money

• For example, in the scenario below, company A
  offering the second lowest price is the best
  value based on the combination of technical and
  financial evaluation having the highest total
  score

8
Best Value for Money Statistic

• In 2004 and 2005, a total of 117 tenders were
  processed under the best value for money
  evaluation method for a total contract value of
  738 million
• - Corrigendum to paragraph 66 of A/60/846/Add.5
  will be issued
• 117 tenders represents approximately 13 of total
  number of tenders issued in 2004 and 2005
• Note of caution
• Difference in contract award value and actual
  expenses (system contract)
• Certain contract value do not expense 100

9
Conclusion

• Best value for money is a principle set in FRR
• Best value for money, for the procurement
  function, is an evaluation methodology based on a
  systematic and transparent process which
  maximizes the business solution for the
  Organization