Price Criterion

The Price Criterion is the financial element of tender evaluation. Every public procurement evaluation in Europe includes some form of price or cost assessment, whether as the sole determinant of award or as one weighted element in a multi-criteria framework.

What is the Price Criterion?

Article 67 of Directive 2014/24/EU identifies price or cost as one of the core elements of a MEAT assessment. The price criterion, in its narrowest form, refers to the quoted price submitted by a bidder: the contract price, the unit rates, the day rates, or the total bid price, depending on how the procurement is structured.

When price is the sole criterion, the evaluation is straightforward: rank compliant tenders by quoted price and award to the lowest. When price is one criterion among several, the authority must define how it will be scored alongside quality criteria. Common price scoring approaches include:

Inverse ratio scoring. The lowest-priced compliant tender receives full marks. Other tenders are scored proportionally (for example, a bid 10% more expensive than the lowest receives a price score that is 10% lower). This approach is mathematically simple but can produce very compressed price scores where all bids are close in price.

Fixed-percentage-off-maximum. A maximum price is set (the authority's internal estimate or a declared ceiling). Bids below the ceiling receive proportional scores; bids at or above the ceiling score zero.

Band scoring. Price ranges are defined in advance, and bids falling within a range receive the associated score. This approach is less common because it requires publishing the price bands, which reveals the authority's budget expectations.

The price criterion score is then multiplied by its weighting of award criteria percentage and added to the weighted quality score to produce an overall tender score.

It is important to distinguish the price criterion from the cost criterion. Price measures the quoted contract price. Cost may incorporate life-cycle elements such as operating costs, energy consumption, and disposal, going beyond the headline price to capture the total economic burden over the contract life.

Why the Price Criterion matters for bidders

In a multi-criteria evaluation, the price criterion determines how much financial headroom you have to trade quality for margin. If price is weighted at 40%, a bidder who is 10% more expensive than the cheapest compliant bid loses four points from the price criterion (in a 100-point system). To recover those points, the bidder needs to score four additional quality points from the 60 quality points available, which requires a roughly 6.7% relative quality advantage. Understanding this arithmetic before you price a bid is essential.

When an abnormally low tender is submitted, the contracting authority is entitled to investigate. A price that appears implausibly low relative to the scope of work or market rates may be challenged even if it is the lowest bid received.

Example

A Polish central purchasing body procures IT hardware. The evaluation is 70% price and 30% quality. Price is scored using an inverse ratio formula: the lowest-priced compliant bid receives 70 price points; each other bid receives 70 multiplied by (lowest price divided by that bid's price). A supplier bidding at 1.15 times the lowest price receives 70 multiplied by (1/1.15) = 60.9 price points, a disadvantage of 9.1 points from the price criterion alone.

Frequently Asked Questions

Can the price criterion weight be zero?

No. A zero price weight would mean price plays no role in the evaluation, which contradicts the economic rationale of MEAT. All EU procurement directives require that price or cost is an element of the award criterion assessment, even if the authority uses a fixed-price approach where quality is the only variable dimension.

What should I quote as my price in a multi-criteria evaluation?

Quote the price at which you can deliver the contract profitably and to the required standard. Deliberately underpricing to win and then recovering margin through contract variations is a risk strategy that erodes trust, may trigger abnormally low tender investigation, and creates contract management problems. Price realistically and focus your differentiation on quality.

How is price scored when there are price ceilings?

Where an authority publishes a price ceiling or budget estimate, bids above the ceiling may score zero on price or be excluded as non-compliant. Check the procurement documents carefully. In some frameworks, a bid above a declared ceiling is automatically excluded regardless of quality.