Offer selection criteria in an EU project – price, quality and technical parameters

Offer selection criteria in a project co-financed from EU funds should cover not only price, but also quality and technical parameters, because selecting only the cheapest offer is permissible only in narrowly defined cases provided for in the Guidelines on the eligibility of expenditure. The beneficiary is obliged to define the criteria in a transparent, measurable and non-discriminatory manner, and their design should enable an objective comparison of offers and the best value for money to be obtained.

Incorrectly formulated criteria are one of the most common reasons for imposing financial corrections during project audits.

What offer selection criteria are and why they are so important

Offer selection criteria are measures defined by the contracting party on the basis of which the offers submitted are assessed and the contractor is selected. In grant projects, their importance goes beyond the standard purchasing dimension. They are part of the system ensuring competitiveness and the rational spending of public funds.

In practice, the criteria perform three basic functions:

• a selection function – they make it possible to select the offer that best meets the needs of the project,
• a control function – they enable the institution to verify whether the expenditure was purposeful and economical,
• an evidential function – they constitute a documented justification for the decision to select a specific contractor.

Incorrectly formulated criteria or adopting price as the only criterion where the nature of the contract requires a qualitative assessment may result in the imposition of a financial correction in accordance with the tariff of corrections annexed to the grant agreement.

Legal basis and documents governing selection criteria

The way offer selection criteria are formulated depends on the procurement procedure and the source of financing. In projects financed from European funds in the 2021–2027 perspective, the following apply in particular:

• Guidelines on the eligibility of expenditure for 2021–2027 (Ministry of Development Funds and Regional Policy),
• the Act Public Procurement Law of 11 September 2019 – for contracting authorities obliged to apply it,
• the competitiveness principle – for expenditure exceeding PLN 80,000 net that is not covered by the Public Procurement Law (PZP),
• project selection rules and templates of grant agreements set by the managing authorities.

Price as an offer selection criterion – when it can be the only criterion

Price remains the most obvious and easiest assessment criterion to apply. It is measurable, objective and leaves no room for discretion. At the same time, EU and national regulations clearly restrict the possibility of using price as the only criterion.

Situations justifying the use of price as the only criterion

Selecting an offer solely on the basis of price is permissible where the subject of the contract is:

• commonly available and has established quality standards,
• clearly defined in the description of the subject of the contract, which eliminates qualitative differences between offers,
• standard, where the technical parameters are defined by norms or a product specification.

Examples include purchases of office supplies, fuel, electricity or standard computer equipment with a strictly defined specification.

Risks associated with the lowest price criterion

In project practice, selecting a bidder solely on the basis of price carries significant risks:

• receiving a low-quality product or service that does not meet the project's expectations,
• the need to incur additional operating or servicing costs,
• the risk of late performance of the contract by a contractor with low capacity,
• the intermediate body questioning the validity of the selection during an audit.

For this reason, in most procedures it is recommended to use mixed criteria combining price with quality parameters.

Quality as a selection criterion – how to measure it objectively

The quality criterion is the most demanding to design, as it requires the contracting party's subjective expectations to be translated into measurable indicators. In grant projects, quality should be assessed on the basis of specific, verifiable parameters.

Measurable aspects of quality

Objectively measurable elements of quality include:

• the contractor's experience in performing similar contracts, confirmed by references,
• the qualifications of the staff assigned to perform the contract (certificates, diplomas, length of service),
• the warranty period and the scope of servicing,
• service response time and the availability of technical support,
• quality certificates held (ISO, CE, industry marks).

How to award points for quality

A quality criterion should be formulated in a way that allows points to be assigned unambiguously. An example of its design:

A criterion designed in this way eliminates the discretion of the evaluation committee and ensures the transparency of the selection process.

Technical parameters as a selection criterion

In investment projects, particularly those involving the purchase of machinery, equipment or specialist software, technical parameters are often more important than price. Defining them precisely makes it possible to obtain equipment that genuinely meets the beneficiary's technological needs.

Designing technical criteria

Technical parameters should be formulated in accordance with the following principles:

• each parameter must be measurable in physical or percentage units,
• the technical minimum should be specified in the description of the subject of the contract, and parameters exceeding the minimum should be scored in the assessment criteria,
• parameters must not point to a specific manufacturer or restrict competition,
• the weight of individual parameters should reflect their actual importance for the project.

Examples of technical parameters in different industries

Depending on the specifics of the project, technical parameters may include:

• production projects – e.g. machine output, energy consumption, accuracy class, noise level,
• IT projects – e.g. processor performance, memory capacity, compatibility with existing systems,
• renewable energy (RES) projects – e.g. installation capacity, module efficiency, performance guarantee,
• R&D projects – e.g. measurement parameters of the apparatus, research scope, expansion options.

How to set the weights of the criteria correctly?

The weights of the criteria determine the share of each criterion applied in the final assessment. They should be set on the basis of an analysis of the nature of the contract and the project objectives.

Typical weight proportions

The following proportions are used in grant practice:

It should be borne in mind that, in accordance with the Guidelines on eligibility, in projects implemented under the competitiveness principle non-price criteria must be genuine and must influence the selection of the most advantageous offer.

The most common mistakes in setting weights

Typical irregularities include:

• giving a non-price criterion a weight of 5–10%, which makes it illusory,
• using criteria that cannot be assessed objectively,
• setting weights in a way that favours a specific bidder,
• omitting significant technical parameters that affect project implementation.

Documenting the offer selection process

Offer selection criteria must be documented at every stage of the procedure. This obligation follows both from the competitiveness principle and from audit requirements.

The documentation of the procedure should include:

• the request for quotation together with the description of the subject of the contract and the assessment criteria,
• confirmation of publication of the request in the Baza Konkurencyjności (Competitiveness Database),
• all offers submitted together with their annexes,
• the offer evaluation report containing a justification of the points awarded,
• the contractor selection report,
• the contract with the contractor and the settlement documents.

Detailed requirements concerning the competitiveness principle and the Baza Konkurencyjności (Competitiveness Database) are available on the portal of the Baza Konkurencyjności.

Financial consequences of incorrectly formulated criteria

Irregularities identified in offer selection criteria result in the imposition of a financial correction in accordance with the tariff of corrections. The amount of the correction depends on the nature of the breach and may range from 5% to 100% of the contract value.

The irregularities most often questioned by audit institutions include:

• the use of criteria that discriminate or restrict competition,
• insufficient justification for choosing the lowest price criterion,
• unclear or discretionary quality assessment criteria,
• inconsistency of the criteria with the description of the subject of the contract,
• changing the criteria after the deadline for submitting offers.

Given the financial dimension of these risks, it is advisable for the design of the criteria to be consulted with an expert before the request for quotation is published. Professional grant advisory services include, among other things, verification of the procurement documentation for compliance with the guidelines.

Practical tips for beneficiaries

Preparing correct offer selection criteria requires several key practical principles to be taken into account:

• criteria should be formulated before the request is published, on the basis of the real needs of the project,
• each criterion must have a defined method of awarding points,
• the technical minimum should be included in the description of the subject of the contract, not in the assessment criteria,
• non-price criteria must have a real impact on the selection of the offer,
• the documentation should be kept in a way that allows the decision-making process to be reconstructed.

Before publishing the request, it is worth carrying out a market analysis to establish realistic technical parameters and market prices. Such an analysis also provides evidence of the reasonableness of the expenditure in the event of an audit.

If you are planning to apply for funding or are implementing a project that requires a procedure in line with the competitiveness principle, it is worth verifying in advance the correctness of the documentation and the design of the offer selection criteria.Contact an expert