Guide
Lowest price or best price-quality ratio
Under LOU chapter 16, section 1, a contract must go to the most economically advantageous tender, judged on one of three bases: best price-quality ratio, cost or price. Which basis applies decides whether you should put your effort into the price, the quality of the text or both.
Which award bases are there in LOU?
| Basis | What is compared | What it means for you |
|---|---|---|
| Price | Only the tender price | The lowest price among the tenders that meet all mandatory criteria wins |
| Cost | Cost, for example life-cycle cost (chapter 16, section 3) | Operation, energy and maintenance can weigh as heavily as the purchase price |
| Best price-quality ratio | Price weighed against quality criteria | A more expensive tender can win if the quality is better |
Whatever the basis, the tender must first pass all mandatory criteria and qualification criteria. The evaluation is only made among the tenders that remain. Qualification criteria never earn points. Read more in the guide on mandatory criteria.
How does a quality deduction work?
Under best price-quality ratio, many authorities convert quality into kronor. Each quality criterion gives a deduction from the price if it is met, a quality deduction (mervärdesavdrag). What the authority pays is still your tender price, but the tenders are compared on a notional comparison price: the tender price minus the deductions.
Other models give points instead of kronor, or add a surcharge to the price for what is missing. The principle is the same: quality is translated into something that can be weighed against price. The tender documents describe exactly how, and that is where you should start reading.
Worked example (made-up figures)
Take a procurement for running an LSS home (supported housing for people with disabilities) where three quality criteria give quality deductions: a named manager with five years' experience gives SEK 100,000, a described plan for residents to meet the same staff gives SEK 60,000, and a described routine for individual care plans gives SEK 40,000. The figures are made up to show the principle.
| Tender | Tender price | Criteria met | Deduction | Comparison price |
|---|---|---|---|---|
| A | SEK 1,000,000 | All three | SEK 200,000 | SEK 800,000 |
| B | SEK 900,000 | Same staff | SEK 60,000 | SEK 840,000 |
| C | SEK 850,000 | None | SEK 0 | SEK 850,000 |
Tender A has the highest price but the lowest comparison price, and wins. Tender C is SEK 150,000 cheaper but loses, because it offers none of what the authority values. The difference between A and B was decided by two criteria that B could have met.
The worked example shows the principle. Real models differ in every procurement, so always use the amounts and points stated in your own tender documents.
What does the award basis mean for how I price?
- Under price: every krona counts. Deliver exactly what is required, no more, and make sure your costing is sharp.
- Under cost: cost the whole life cycle as the tender documents describe it. A more expensive but more energy-efficient option can give a lower total cost.
- Under price and quality: work out what each quality criterion is worth in kronor or points, and compare it with what it costs you to meet it. A criterion that gives a SEK 100,000 deduction and costs SEK 30,000 to meet is usually worth taking.
Also look at how the price is calculated. If the hourly rate is multiplied by a notional volume, it matters a great deal which price item carries the most weight. More on the process in the guide on pricing a tender.
What does the award basis mean for how I write?
When quality is judged on written descriptions, the evaluators assess them against a scale stated in the tender documents. Write to that scale. If the top grade requires "concrete examples and a clear division of responsibilities", give concrete examples and state who is responsible.
- Follow the headings and order of the tender documents, so the evaluator finds the answer to each criterion.
- Answer what is asked, not what you would most like to say about your company.
- Be concrete: names, times, numbers, routines. General promises are hard to give high grades.
- Only promise what you can keep. What you write in the tender becomes part of the contract.
Under lowest price the text matters less, but it must still show that every mandatory criterion is met. A cheap tender that misses a criterion is rejected.
How do I read a points model?
In points models, the price and each quality criterion get a weight, for example 60 per cent price and 40 per cent quality. The lowest price often gets full points and the others get points in proportion to it. Quality is assessed against a scale, for example 0 to 5. The weighting tells you how much a better description is worth compared with a lower price level.
Check carefully how the price points are calculated. In some models a small price difference gives a large difference in points, in others almost none. Run the model with a couple of plausible prices before you decide where to spend your time.
Where does Procura fit in?
Procura is a Swedish service that shows suppliers which public tenders they qualify for and, where the price has been published, what similar contracts were awarded for. Procura first decides whether you qualify, and when you do, you can generate a draft tender from your structured profile. The price section is never written automatically with figures. Read more about how it works.
Sources
- Swedish Public Procurement Act (2016:1145), riksdagen.se: chapter 16, sections 1 and 3
- Upphandlingsmyndigheten: guidance on evaluation models and award criteria
Frequently asked questions
Which award basis is most common?
It varies between sectors and authorities. Simple, standardised goods are often procured on price, while services where delivery varies a lot are more often procured on price and quality. The tender documents always state which basis applies.
Can I challenge an evaluation model before I submit a tender?
Yes. Ask questions during the tender period if the model is unclear or seems to give odd results. If the model breaches LOU, a supplier can apply for review even before the award, but it is often better to ask first.
What happens if two tenders get exactly the same comparison price?
The tender documents usually state how ties are decided, for example by drawing lots or by letting a particular criterion decide. If nothing is stated, ask during the tender period.