Price-Quality Methods for Tender Evaluations

Parliamentary Question by Mr Zainal Sapari:

To ask the Minister for Finance (a) how many Ministries and statutory boards adopt the Price-Quality Method for tender evaluations when procuring cleaning, security and landscape services; (b) what is the average percentage of price over quality adopted in such procurement contracts awarded in 2015 and 2016 (to date); and (c) whether the Government will consider adopting a 30:70 ratio for the Price-Quality Method, with 30 per cent allocated to price and 70 per cent allocated to quality as recommended by the Tripartite Committee for Low-Wage Workers and Inclusive Growth (TriCom). 

Reply by Deputy Prime Minister and Minister for Finance Tharman Shanmugaratnam:

The use of Price-Quality Method, where procurement decisions are made based on a combination of both “Price” and “Quality” factors, has been in practice in the Public Service for many years.  However, its adoption and the weightage of the “Quality” factors used vary from procurement to procurement depending on the context of each procurement.  For example, the evaluation criteria for cleaning services for office premises will be different from those required for street and expressway cleaning. In fact, the need to cater to the different context of the procurement was also acknowledged in the Best Sourcing Practices Advisory published by the Tripartite Committee for Low-Wage Workers and Inclusive Growth (TriCom), where it was noted that while buyers “should aim towards achieving a weightage of 30:70 between Price and Quality criteria respectively…the weightage may be adjusted based on the needs of your organisation”. 

For tenders called in the cleaning, security and landscape sectors, “Quality” factors were considered in the award of all the tenders called in 2015 and 2016. For these tenders, where weightages were explicitly specified, the “Quality” component made up 20% to 70% of the total evaluation criteria.

We agree that security, cleaning and landscape services should not be procured based on price alone, and we are further reviewing the emphasis placed on “Quality” factors in the evaluation of these tenders.  However, even as the TriCom recommended that buyers should aim towards achieving a 30:70 Price-Quality weightage, it also recognised that there is no ideal price-quality weightage that is suitable for all situations.  What goes into the “Quality” component must be relevant to the tenderers’ ability to provide the required service.  If we simply set 70% as the weightage for “Quality” factors, but they do not allow us to differentiate the ability of the tenderers to provide the cleaning, security or landscape services, then the tenderers may end up being assessed with the same “Quality” scores, and it will still end up with competition based on price.  

We share Mr Zainal Sapari’s interest in uplifting the cleaning, security and landscape sectors, and in improving the working conditions of the workers.  To achieve these objectives in a sustainable manner, the Government has supported the adoption of the Progressive Wage Model which the tripartite partners have agreed to.  We had taken the lead to procure only from cleaning service providers who adopt the wage model,  even before it became a licensing requirement.  

We have also taken onboard feedback to use less prescriptive and less headcount-based tenders.  As I have mentioned at the Ministry of Finance Committee of Supply response earlier this year, we are now working with respective lead agencies and industry to progressively introduce outcome-based procurement in the cleaning, security and landscape sectors over time. This would allow tenderers to consider using technology and innovative solutions.  Along with this, we will also increase the emphasis and weightage placed on the “Quality” factors which reflect the tenderers’ ability to provide the service, such as manpower productivity of the tenderers and the quality of their workforce.