Which award criteria can be applied when sourcing requirements from external suppliers?

Award criteria are the standards against which prospective suppliers' tenders or proposals are evaluated to select the winning bid. While delivery is a factor, 'Price and total life-cycle costs' represents the most comprehensive financial criterion. This approach, often called Total Cost of Ownership (TCO), considers not just the initial purchase price but all costs associated with the acquisition, use, maintenance, and disposal of a product or service. This provides a more accurate assessment of value for money, which is a primary objective in public and private sector procurement.

A. Delivery promises of goods: This is a valid but less comprehensive criterion. It is one of several non-cost factors considered, but TCO (B) is a more fundamental and overarching financial award criterion.
C. Plans and manpower numbers: These are typically assessed during the supplier appraisal or pre-qualification stage to determine capability, not as primary criteria to award a specific contract.
D. Understanding of supplier operations: This is part of the buyer's due diligence and supplier relationship management, not a specific criterion for scoring and awarding a tender.

1. CIPS. (2018). Ethical Procurement and Supply. Profex Publishing Limited. L4M4, Chapter 3, pp. 109-111. (Discusses award criteria including price, TCO, quality, and delivery).

2. Lysons, K., & Farrington, B. (2020). Procurement and Supply Chain Management (10th ed.). Pearson. Chapter 10, Section 'Criteria for the evaluation of tenders', discusses the importance of whole-life costing as a key award criterion.

3. European Union. (2014). Directive 2014/24/EU on public procurement. Article 67, 'Contract award criteria', specifies that contracts shall be awarded on the basis of the most economically advantageous tender (MEAT), which includes price or cost, using a cost-effectiveness approach such as life-cycle costing.