P200: Strategic Procurement

Commodity Update

Best Value for Procurement Now Available to UC as an Evaluation Method

We are pleased to announce that Best Value is now available to all UC’s as a bid evaluation method. We now have the option to award competitively bid contracts by using either Best Value, Cost Per Quality Point, or price/cost alone.

For those unfamiliar with the methodology, Best Value means we can award a bid based on the most advantageous balance of price/cost, quality, service performance and other elements, as defined by the University, on competitively bid contracts involving a bid of more than $100,000 for goods, material and services.

When using Best Value method for awarding competitively bid contracts the University must comply with the following requirements:

1. The minimum threshold for price/cost will be 25% of the total score. The minimum threshold will be reviewed and modified by the UC Procurement Leadership Council periodically as needed.

2. The number of points used in an evaluation can vary as long as the weighted value of all criteria equals 100% of the points, with 25% or more of the points allocated to price/cost. Price/cost is the calculated expenditure per the bid. All criteria except price/cost must be scored first to avoid pricing influencing the scores. After non-price/cost scores are calculated the price/cost score is added to come up with the total score.

3. Decision to use Best Value method and elements included in qualitative criteria for bid evaluation will be determined by the system-wide commodity teams for system-wide bids and by campus/medical center Procurement Management for the local bids.

4. Price/cost is scored based on the pre-determined percentage of the total available points. Price/cost from all bidders must be “normalized” with the lowest bidder receiving 100% of the total available points and the other bidders receiving a percentage of the total available points per the sample calculation below:

5.      Sample Price/Cost Normalization                                                        Total Price/Cost Points Available -500

Bidder #1: Low bidder at $50,000 receives maximum points                                                500

Bidder #2: Next lowest bidder at $55,000 receives 90.9% of max points                            455

($50,000 divided by $55,000 = 90.9% X 500 = 455)

Bidder #3 Highest bidder at $60,000 receives 83.3% of max points                                    417

($50,000 divided by $60,000 = 83.3% X 500 = 417)

Above points are added to the other criteria point totals to come up with the total points. Bidder with the highest overall total points is considered the lowest responsible bidder with best value in terms of price/cost, quality, service and performance that meet the University’s requirements

6. Under a Best Value agreement, bid participants must be notified in writing at the end of the agreement award process.

7. Bid Protests will be handled as outlined in Bus-43. The policy will be reviewed and modified by the Procurement Leadership Council periodically as needed.

For more information, please read the full announcement from Bill Cooper or contact Haggai Hisgilov (Haggai.Hisgilov@ucop.edu).

 

Haggai Hisgilov

Executive Director of Procurement Services, UC Office of the President