1. Best Value For Money adjudications for Industrial Services C. Lara/CERN 14 November 2013

2. Agenda Industrial Services (IS) contracts Principles BVFM formula Quality criteria Bid opening Statistics Conclusion

3. What are IS Contracts have a high component of manpower (~80% of the contract price is salary) Represents ~1500 contractors personnel on the CERN site Services executed on both French and/or Swiss territory on the CERN site Contracts for a minimum of 3 years (up to 7 years in total)

4. Transport and handling

5. Welding

6. Welding and electromechanical work

7. Cabling

8. Mechanical workshop

9. Adjudication Basis Lowest compliant or Best Value for Money (BVFM) In June 2008, FC agreed to the principle of most economically advantageous for service contracts

10. Decision on adjudication basis The decision to adjudicate a contract on a BVFM basis will be taken: by the Procurement Service in collaboration with the technical officer before the Market Survey is launched on a case by case basis

11. Principles The award of the contract shall be based on the price and quality criteria The price weight represents at least 50% The quality weight shall not exceed 50%

12. Weight of quality and price Weight of Quality (Qw) and price (Pw) may vary according to: the technical complexity of the activity the technical specification financial considerations

13. Scoring bids Total score = price score + quality score Choices made: Price score is based on the lowest bid Quality score measures technical bid against established criteria

14. PriceQuality QMAX = maximum number of quality points Quality score Qw Quality points QMAX Bid bBid a x2x2 LOWP = lowest bid Price score Pw Price (CHF) Bid b LOWP Bid a x1x1 Price weight / quality weight= Pw / Qw Where Pw + Qw = 100 Impact of price and quality © Serge Oliger/EN-EL Both diagrams cannot be added

15. Price Quality Quality points (% de QMAX) X 2 = x 2.100/QMAX x 2 = no. of quality points of bid x Quality score Qw Q points (%) 100 Bid bBid a X2X2 Difference (%) compared to LOWP X 1 = (x 1 /LOWP -1)100 x 1 = price of bid x Price score Pw Difference (%) Bid b 0 Bid a X1X1 Translation in %

16. BVFM formula (final choice) Pw =Qw =50 Scores P, Q 100 Q(X 2 ) = (½).X 2 For an adjudication based on 50/50, an offer x% more expensive than the lowest bid has to compensated by the same x% of quality points X 1 increase (%) X 2 Q points (%) P(X 1 ) = -(½).X 1 + 50 X%X% X%X% 0

17. Compensation for Pw/Qw = 50/50 Pw =Qw =50 Scores P, Q 100 X 1 Difference (%) X 2 Q points (%) 100% 0 For Pw/Qw = 50/50 100% of the quality points can compensate a difference up to 100% of the lowest bid (2 x Qw)

18. Maximum difference in price that could be compensated for Pw/Qw = 75/25 Qw =25 Scores P, Q 100 X 1 Difference(%) X 2 Q points (%) For Pw/Qw = 75/25 100% of the quality points can compensate a difference of up to 50% (2 x Qw) 100% 0 Pw =75 150 50% Q(X 2 ) = (¼).X 2 P(X 1 ) = -(½).X 1 + 75

19. Maximum differences in price that can be compensated Pw/Qw Price curve P(X 1 )= -(½). X 1 + Pw Quality curve Q(X 2 )= (Qw/100). X 2 Maximum theoretical difference (%) X 1 = 2.Qw For X 2 = 100 Ratio Q Points /extra cost X 2 /X 1 =100/(2.Qw) 50/50 -(1/2). X 1 + 50(1/2). X 2 1001 60/40 -(1/2). X 1 + 60(2/5). X 2 805/4 70/30 -(1/2). X 1 + 70(3/10). X 2 605/3 75/25 -(1/2). X 1 + 75(1/4). X 2 502 80/20 -(1/2). X 1 + 80(1/5). X 2 405/2 90/10 -(1/2). X 1 + 90(1/10). X 2 205 100% of the MAX quality points can compensate up to : 2 x Qw %

20. Adjudication formula Weighted score: Total weighted score = (weighted quality score) + (weighted price score) Where: Weighted quality score = Quality weight x Quality score Maximum quality score The maximum price score is awarded to the lowest compliant bid. Weighted price score = price weight -50 * price for bid -1 price of lowest bid

21. Quality criteria Quality criteria shall be: Objective measurable Specific for each activityrelevant Impartial fair competition Transparent bidders informed

22. Quality criteria and scoring Adjudication quality criteria are defined prior to dispatch of the IT Quality criteria and scoring will be defined in a Memorandum drafted by PS and Technical Dept. Criteria shall be submitted to Head of FP/PI for approval

23. Contractual organisation

24. Test, bidders experience, QA, training, supplementary personnel, tools and quality of bid

25. Technical tender documents The technical specification shall: define minimum contractual obligations of future contract describe technical and delivery requirements Quality criteria : Are used to score the quality of the bid for services which excess the minimum requirements indicated in technical specification

26. Double enveloppe procedure One for the technical bid (evaluation questionnaire and tech. info) and a second for the commercial bid with prices (tender form) Both envelopes shall be sent in a single envelope

27. Bid opening Each technical bid is evaluated and scored according to the pre-defined adjudication criteria Once technical scores have been finalised, a second opening is organized for the commercial opening of compliant bids All members of evaluation panel are bound to confidentiality

28. Statistics

32. Conclusion Bids of better quality Evaluation questionnaire draws the bidders attention to resources necessary for the future contract Better understanding to CERNs requirements may lead to less surprises at the start of the contract

33. Procurement web site Cristina.lara@cern.ch