Evaluation of Offers Guideline

State agencies should establish an evaluation panel for purchases above $50,000 or where the evaluation of the bids is based on a qualitative assessment of selection criteria. Evaluation panels may also be used for purchases under $50,000.

The evaluation panel will assess the bids received against the selection criteria. The evaluation panel must include an appropriate mix of skills and experience relevant to the nature of the purchase.

The Finance evaluation handbook template provides a format and methodology for rating the responses according to the selection criteria. The evaluation handbook should be prepared and the evaluation methodology and scoring agreed to by the evaluation panel before the Request’s closing date.

The following provides an overview of the roles and responsibilities of evaluation panels, and identifies useful insights into the issues that panels need to consider.

Objectives

The key objectives of the evaluation panel are to:

• Make a recommendation to the Accountable Authority (as to the supplier/s that best represents value for money;
• Ensure the assessment of responses is undertaken fairly;
• Ensure adherence to the Western Australian Procurement Rules and Government procurement-connected policies; and
• Ensure that the requirements specified in the Request are evaluated in a way that can be measured and documented.

Recommendations

The evaluation panel does not make the contract award decision. The Accountable Authority makes the final decision and awards the contract. If the Accountable Authority does not agree with the evaluation panel recommendation then:

• The recommendation can be referred to the evaluation panel to review/reconsider; or
• The Accountable Authority can overrule the recommendation and award the contract on the basis of what he/she believes represents better value for money.

In either case, detailed supporting documentation justifying the final decision must be recorded.

When an Evaluation Panel Should be Used

When evaluating bids on the basis of a qualitative assessment and the estimated contract value is $50,000 up to $250,000, then an evaluation panel of at least two voting members should be convened.

When evaluating bids on the basis of a qualitative assessment and the estimated contract value is $250,000 and above, then an evaluation panel of at least three voting members should be convened.

Where a Finance Building and Contracts representative is facilitating a procurement for State agencies to procure products or services (procurements with an estimated contract value of $250,000 and above, or as otherwise specified in an Agency Specific Procurement Direction), then the Finance representative must be involved in the evaluation process. This may be as a facilitator or advisor and/or voting member. The Finance representative will not be the evaluation panel chairperson.

Evaluation panel members should possess a range of skills and experience relevant to the nature of the purchase. The panel may have non-voting members but they should be used sparingly and their role clearly defined. Where non-public servants that are engaged to provide technical and/or specialist expertise and/or advice to the evaluation panel, their role should be designated as a ‘technical and/or specialist advisor’ and they should not have voting rights. 

Extreme care should be taken when appointing industry representatives as evaluation panel members – even those in a non-voting capacity.  These members of the evaluation panel are often given commercially sensitive information. Where such industry representatives are from the same market sector as those bidding, there is likely a significant conflict of interest as the panel member may have access to a competitor’s pricing structure, financial information and their approach to bidding for Government contracts. This raises significant concerns and conflicts with the Western Australian Procurement Rules, which require everyone involved in procurement to act ethically and with integrity.  

Procedures and Principles for Evaluation

State agencies engaged in purchasing products and services from the private sector must ensure that their evaluation process meets appropriate probity ethical standards.

Evaluation panels are part of these processes, so it is important that panel members are aware of the principles of ethical conduct and accountability.

Panel members are responsible for ensuring that the process is fair. Failing to follow a fair process may lead to a judicial review, with a re-tender potentially being required – this would be costly in terms of time and resources.

Requirements of Fairness

The following principles must be adhered to in the evaluation process:

Appropriate knowledge

Before commencing on the evaluation process, the evaluation panel and any supplementary members should have an understanding of:

• The contents of each response;
• The selection criteria against which responses will be rated; and
• The process by which each response will be rated.

Relevant considerations

In determining value for money, the evaluation panel and any supplementary members must consider all relevant factors.  These include Government’s social, economic and environmental priorities; cost; and other relevant non-cost factors such as risks associated with a supplier’s offer, a supplier’s financial capacity and a supplier’s technical capability.  Another relevant non-cost factor is a supplier’s past or current performance and behaviour. This includes any prior unethical conduct or dishonest business practices, and any associated reputational or probity risks to the State.

Refer to the Achieve Value for Money Guideline for further information about factors that State agencies need to consider in their decision-making. 

Irrelevant considerations are any matters that are not related to a supplier’s suitability with respect to the Request requirements.

Appropriate sources of information

A supplier’s offer is an appropriate source of information for assessing value for money. This includes a supplier’s responses to compliance and disclosure requirements; offered pricing, responses to qualitative criteria, and supporting information.

An evaluation panel may also consider information not contained in a supplier’s response, provided that the information is fact based and verifiable. In fact, evaluation panels owe a duty to the State to consider all relevant risks when making procurement decisions, and to meet that duty it may be appropriate and necessary to consider information about suppliers from a range of sources.

Inappropriate sources of information include hearsay, anecdotes, and personal or unsubstantiated views of panel members.

If information from appropriate external sources impacts the value for money assessment, the evaluation panel must document the impact in a manner commensurate to the value, risk and complexity of the procurement. The external information must also be kept on file.

Bias

The evaluation process must be free of bias and any perception of bias. Any connections between an evaluation panel member and a potential supplier must be disclosed to the evaluation panel chairperson.

Evaluation panel members and supplementary members should not accept gifts from a potential supplier and should limit contact with potential suppliers during the evaluation process.

Any possible issue of bias should be discussed with the evaluation panel chairperson as soon as it arises.

Evidence of probity

Evaluation ratings and selections must be made on the basis of the material requested and included in the response, together with information obtained through meetings, presentation, and clarifications.

Confidentiality

The contents of each response should not be disclosed to any party outside of the formal evaluation process. 

Each response should be viewed as commercially confidential information. As such, the facilitator of the evaluation panel should collect all responses and completed evaluation handbooks after the final evaluation meeting.

Commenting during the evaluation process

The evaluation panel chairperson is the only person permitted to comment to outside parties about the evaluation process and outcome. The evaluation panel and any supplementary members should not discuss any element of the evaluation process with work colleagues or any other party.

Recording of response scores

The evaluation panel must fully record their evaluation against the selection requirements or criteria.

Chairperson’s Duties, Obligations and Responsibilities

The chairperson’s role includes ensuring that the evaluation is undertaken fairly and in accordance with Government policies, including achieving probity in the evaluation process. The chairperson should as a minimum:

• discuss the contents of the evaluation handbook with the panel; 
• ensure that all panel members understand the end-to-end evaluation process and expectations;
• discuss and manage any conflict of interest issues;
• discuss confidentiality and security of information;
• make sure that panel members are aware that all documents and records must be kept; and
• inform evaluation panel members that all documents and records may be scrutinised in the event of a freedom of information application or complaint.

The chairperson must also ensure that the requirements specified in the Request are evaluated in a way that can be measured and documented. It is the chairperson’s responsibility to:

• facilitate and moderate discussion among the panel to help ensure that each submission receives a fair review. At the start of the evaluation the chairperson should review with the panel the scoring methodology, criteria and weightings as set out in the evaluation handbook;
• ensure all panel members are using the correct scoring criteria;
• ensure all scoring decisions relate to the content of each submission and can be justified; and
• assist the panel to reach consensus on comments and scores that accurately reflect the quality of each submission when measured against the selection criteria.

The chairperson must also make a recommendation to the Accountable Authority as to the respondent(s) that best represent value for money. The chairperson should:

• ensure that detailed supporting documentation justifying the final decision is recorded;
• check that the panel has complied with all Procurement Rules and Government procurement-connected policies and this is reflected in the report; and
• ensure that the evaluation report contains comments and scores that reflect the process that was followed and that the evaluation report accurately evidences the evaluation panel’s deliberations and scores.

The chairperson may also be called upon to assist the procurement facilitator to provide feedback to unsuccessful respondents.

Declaration of Confidentiality and Interest

Parties involved in the procurement in any capacity will be required to complete a Declaration of Confidentiality and Interest form. Once completed, the form should be provided to the facilitator of the evaluation panel.

Panel members may have already completed a Declaration of Interest and Confidentiality form if they were involved earlier in the procurement process. Panel members in this situation are to reaffirm, in writing, their declaration to ensure no conflicts (whether actual, potential or perceived) have arisen as a result of the submission of offers.

Where a completed form or any reaffirmation declares an interest, the officer must take and document all reasonable and necessary steps to manage the conflict. This should be documented and put on file.

The Western Australian Government has a role to play in the ongoing development of Western Australian industry. Amongst other initiatives, agencies may perform this role by acting as references for companies or individuals with whom the Government does business.  

Historically, there has been some reluctance or uncertainty amongst agencies about acting as a reference for suppliers. This issue has arisen again, specifically in relation to the local Information Communications Technology (ICT) industry. Industry representatives have submitted to Government that if agencies agree to act as references for local suppliers, then local suppliers are likely to be more successful in obtaining additional business, particularly in other markets, which in turn will help foster a robust and technologically evolving local industry.

Government is an important buyer and references from agencies can be of considerable value to a supplier. As a general principle, agreeing to provide a reference is acceptable practice and is supported where the contractual relationship has been of substance.

Agencies should carefully consider when to give references and the content of such references. When asked to provide a reference, agencies should advise the supplier of the substance of the information the agency is likely to provide at the time the supplier seeks to include the agency as a referee. This allows the supplier to decide whether to proceed with that agency as a reference.

Agencies should only give references to those suppliers:

• with whom the agency had, or has, a contract;
• who were chosen as a result of a competitive procurement process; and
• who have sought consent from the relevant agency prior to nominating that agency as a reference site.

When giving references, agencies must ensure that the statement provided:

• is factual and accurate and accords with any performance feedback given to the supplier;
• reflects the extent of the agency’s usage of the supplied product or service, the length of use of the product or service and the degree to which it met or failed to meet the contract requirement;
• is not represented as an individual testimonial, carrying the authority of government or the personal opinion of its employees; and
• does not bring the State or Government into disrepute.

Where an agency gives its consent to act as a reference, and later wishes to withdraw its consent, the agency should do so by giving written notice to the supplier.

Please note that the information provided above relates specifically to references given by an agency to a third party for the purposes of commenting on a supplier’s performance against a specific contract. Generally this will be the case where a supplier nominates an agency as a reference in a tender document for other work, and the party who released the tender is seeking information relating to the supplier’s past performance for the purposes of evaluating the supplier’s tender.

The information provided above does not relate to providing a published ‘endorsement’ of a supplier. In accordance with most standard form contracts released by the Department of Finance, an agency may give its written consent to a supplier to enable the supplier to publicise a reference provided by an agency. Where an agency gives its consent it should also stipulate that the supplier is to provide the agency with a draft of the publication prior to release.

The Department of Treasury maintains the Competitive Neutrality Policy, which ensures that Government businesses do not enjoy a net competitive advantage when tendering simply because of their public sector ownership.

If you receive a bid from a government business please ensure that it is priced in accordance with the Competitive Neutrality Policy.

Negotiations in the tendering phase are not always necessary but when they are undertaken, it is critical that officers:

• are prepared including clearly identifying the responsibilities of each member of the negotiation team, having a position on each item to be negotiated;
• act ethically to ensure the integrity of the procurement process is upheld; 
• ensure there is sufficient documentation on the outcomes agreed by both parties; and
• maintain the confidentiality of all offers.

The Department of Finance have developed a Negotiation Plan and guidance that should be used when undertaking negotiations in low to medium value/risk procurements. For high value/risk procurements or negotiation items, agencies should contact their Department of Finance procurement facilitator (if applicable), their in-house legal team (if applicable) or the State Solicitor’s Office, for further advice.

It is important that officers understand the difference between clarifications, shortlisting and negotiations as they each will dictate the process to be followed. The differences between each are included in the Negotiation Plan.

Procurement documentation should be commensurate with the value and risk of the procurement activity. A simple direct purchase procurement may only require a file note documenting the purchase, however, procurements with significant value, risk or complexity will require a much more detailed evaluation report outlining the evaluation of offers and how a value for money decision was made.

Therefore, as appropriate to the nature of the Procurement, an evaluation report should address:

• the procurement method;
• the evaluation process;
• the offers received;
• any procurement policy implications;
• the consideration of any associated risks;
• details of negotiations undertaken, if applicable;
• value for money considerations; and
• a recommendation.

Evidence of procurement decision making should also be kept for purchases valued less than $50,000. Finance suggests using the Verbal Quote Form.
Officers purchasing a product or service using a written quote (usually between $50,000 and $250,000) should use the evaluation report provided as part of the Written Quote Template Suite

Officers purchasing a product or service valued at $250,000 or more, should use this Evaluation Report, or for community services, this Evaluation Report.

Evaluation reports must still be completed for procurements valued $50,000 or above, that are directly sourced as a result of an exception under Rule C4.2 (refer to section 4.8.1) or an exemption under Rule C5.2.