Last edited 05 Dec 2016

Contract award

Contents

[edit] Introduction

The term ‘contract award’ refers to the process of formally notifying a tenderer that they have been selected as the supplier for a particular contract.

Before a contract can be awarded, a selection process is likely to have been undertaken which might involve:

[edit] Selection criteria

There are a number of different bases upon which a contract can be awarded:

[edit] Lowest price

In this simple method, the lowest priced tender (or best price) wins the contract. However, following this method excludes other elements of the tender, such as relevant experience, being taken into consideration when awarding the contract and does not always result in best long-term value for the client. Low prices can produce low quality, or result in claims and conflict between the client and the supplier.

[edit] Most economically advantageous tender (MEAT)

This method allows for factors other than, or in addition to, the price to be taken into consideration, such as quality, experience, competence, capability, capacity, estimated time for completion, life cycle costs and so on. If this method of awarding is to be used, it should be set out in the tender documents, along with the system of weighting that will be applied to each of the selection criteria.

[edit] Mean value

This method awards the contract to the bid that is closest to the mean value of the proposals. This is commonly adopted where numerous proposals are expected, but can leave suppliers uncertain where to pitch their bid.

[edit] Exclusion of the extremes

This method is used to take away the bids that deviate most, lowest and highest, before then proceeding with one of the three methods above.

[edit] Contract award procedure

Once the successful tenderer has been selected a period of negotiation will begin. A reserve tenderer may be retained in the event that negotiations with the preferred tenderer are unsuccessful.

A tender report may then be prepared providing a brief history of the tendering process and an analysis of each tender submission and any subsequent negotiations and concluding with a recommendation.

All tenderers should be informed of the decision to award the contract to a particular tenderer.

If OJEU procedures are being followed, it may be necessary to publish a formal contract award notice once the successful tenderer has been selected. A ‘standstill period’ may then be required. This is a pause of at least 10 calendar days between the decision being notified to all tenderers and the final contract conclusion. This allows for suppliers to challenge the decision.

The contract administrator (or sometimes the cost consultant) then collates the contract documents and arranges for the printing (engrossment) and execution of two copies, one for the client and one for the supplier. Alternatively, the client might retain one executed contract, with certified copies being issued to the supplier, this can avoid potential errors in preparing two contracts for execution. The supplier may be required to provide a performance bond, warranties, evidence of insurance cover and so on.

Contract award and contract execution may not necessarily happen at the same time. In fact it is relatively common (although not advisable) for contracts to remain unsigned until well after work has begun.

Contracts may be executed under seal (signed by the parties, witnessed and most importantly made clear that they are executed as a deed) or under hand (a 'simple contract' that is just signed by the parties). See Contracts under seal v under hand for more information.

[edit] Find out more

[edit] Related articles on Designing Buildings Wiki