Public sector procurement has long faced pressures of delivering projects at the lowest possible cost, which usually means choosing the lowest bidding supplier. The unfortunate reality is that low bid procurement can often result in unintended negative consequences, such as hidden costs that make themselves known later in the project, poor performance, delays in delivery, weak supply chains and missed opportunities for innovation, community benefit and other social value.
The implementation of the Procurement Act 2023 is helping to transform public procurement from purely cost-based decisions towards a more balanced, transparent, and outcomes-focused model. The process of evaluating suppliers now needs to be based on multiple factors to deliver better results for projects and communities across the UK.
In this article, we explore why the lowest-price procurement model is no longer fit for purpose, how to create a more strategic supplier evaluation framework and how organisations can embed the objectives of the new procurement regulations into the strategy, for the benefit of all.
Jump to:
● The risks of low bid procurement
● Establishing true ‘value’ in supplier evaluations
● Supplier evaluation that looks beyond cost
● How Procurement Hub can help
The risks of low bid procurement
Choosing the lowest bidder in a procurement process might seem like the most fiscally responsible decision, but unfortunately it can sometimes prove to be a false economy, undermining the very goals that you aim to achieve in terms of value for money. Some of the risks can include:
Hidden costs and scope creep
Suppliers submitting the lowest bids can sometimes cut corners to win the contract, or quote for a bare minimum scope when, in reality, changes will have to be requested in order to deliver the project to the expected standard, which will have cost implications. Not only is this damaging to the budget, it can also have a negative impact on buyer and supplier relationships.
Performance compromise
If a chosen supplier has submitted a ‘bare bones’ bid for the contract, it may be the case that some corners have been cut in order to achieve that cost, which can result in substandard works or services being delivered. Decisions that are made on a cost-first basis can also be to the detriment of other areas of the project, such as overall timelines being delayed as well as generally lower-quality outcomes than expected. In some cases, it could even result in project failure altogether, which can have a damaging impact both financially and reputationally.
Weak supply chains
Low-cost suppliers can sometimes bid low in the first place because they rely on supply chains that are not proven or established. Fragile and unsustainable supply chains can easily be disrupted, which can result in delays and cost increases at any time, which could put the entire project at risk.
Lack of local and sustainability credentials
In some cases, prioritising price in procurement decisions means that local SMEs, social enterprises and other suppliers based in the community where the project is happening can be bypassed in favour of larger providers who can offer a slightly lower cost. This approach disregards the other benefits that using local and more sustainable suppliers can bring to a project, such as long-term value to the community, greater innovation and an overall higher social impact.
Establishing true ‘value’ in supplier evaluations
The Procurement Act 2023 recognises that cost and value are not the same thing. Value incorporates qualitative and societal outcomes, often for the short, medium and long-term. This could include elements such as carbon emissions, local job creation and improved community engagement and wellbeing. Supplier evaluations as part of procurement will need to reflect these broader concerns to ensure that funds are being spent in ways that bring the most value.
Social value is now a mandatory consideration in public procurement, so the ways in which suppliers are evaluated needs to underpin these objectives to create a lasting positive impact.
Choosing suppliers based on quality and value yields long-term benefits that go beyond the project delivery. These can include:
● Stronger partnerships: High-quality suppliers tend to collaborate more effectively, share innovation and take ownership of outcomes.
● Resilient operations: Suppliers who invest in people, processes, and sustainability are more likely to withstand shocks, be able to overcome mid-project challenges and maintain service continuity.
● Greater community impact: Social enterprises and SMEs reinvest in their communities, helping buyers and projects meet their levelling-up and net zero goals.
● Better governance and accountability: Suppliers with robust internal controls, clear communication and ethical practices can reduce reputational risk.
Supplier evaluation that looks beyond cost
Identifying suppliers that offer best-fit for a project in terms of multiple criteria, beyond the simplistic cost metric, can feel daunting. Buyers need to be able to determine which suppliers can be a good option financially, but also deliver on quality, risk management and even create additional value too. We’ve compiled some tips and examples to help with the evaluation process.
Adjust your weighted evaluation criteria
Rather than giving a disproportionate weighting to cost, you can develop a scoring matrix that also accounts for:
● Quality of proposal (e.g. 30–50%) – Methodologies, capabilities, and innovation.
● Experience and track record (e.g. 10-15%) – Proven delivery on similar projects.
● Social value (e.g. 15–25%) – Environmental sustainability, diversity and inclusion, community engagement.
● Risk and resilience (e.g. 10–20%) – Supply chain transparency, business continuity, and ethical standards.
● Cost (e.g. 10–20%) – Still important, but not the sole deciding factor.
By weighting quality and ‘value’ outcomes more heavily than cost alone, you can better prioritise bids that align with your strategic goals.
Ask for scenario-based information
You can get a better understanding of the value that a supplier can bring to the table when there is relevant context in the evaluation process, which you can achieve by asking some scenario-based questions. For example:
● “Describe how your team would manage a disruption in your supply chain during a critical phase of the project.”
● “Outline your approach to engaging SMEs in the delivery of this contract.”
● “How will the local economy benefit from your involvement in this project?”
Be transparent in your scoring methodology
Transparency needs to be built into every stage of your tender evaluation process, with early supplier engagement being beneficial to make sure that they understand exactly what you’re looking for before bidding.
This not only helps you stay compliant with the requirements of the Procurement Act 2023, it also helps you to build trust with suppliers and enables fair competition. Having a clearly documented evaluation process also helps when it comes to providing useful feedback to unsuccessful bidders.
How Procurement Hub can help
Developing a more wide-ranging and robust supplier evaluation strategy requires you to shift from transactional buying to strategic sourcing, which can include a mindset change as well as making practical alterations to your processes. At Procurement Hub, we have extensive experience in helping procurement teams to transform strategy in multiple areas, helping you to achieve your goals and objectives, while having a valuable long-term impact on communities.
You can become a member for free to access our wide range of flexible DPS and framework solutions, with pre-qualified suppliers that can deliver value in a variety of ways to your project.
Get in touch to find out more.