Procurement Division

Evaluation by Best Value for Money

Methodology

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 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

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 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
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 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

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 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
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 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
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 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

Technical Evaluation (60%) Commercial Evaluation (40%) Total Score

Score (A) Adjusted Score (B) Price (C) Score (D) (B) + (D)

A 90.0 54.0 $230,000 38.3 92.3

B 70.0 42.0 $280,000 31.4 73.4

C 85.0 51.0 $220,000 40.0 91.0

D 88.0 52.8 $240,000 36.7 89.5

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 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%
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 Conclusion
• Best value for money is a principle set in
FR&R
• 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