"Procuring the lowest-bidding contractor
can cost more
in the long run...
Office of the Auditor General of Ontario
“The American Public Works Association believes that the public interest is best served when governmental agencies select architects, engineers, and related professional technical consultants for projects and studies through Qualifications Based Selection (QBS) procedures. ”
National APWA Policy Statement
What Is QBS?
QBS is a procurement ideology that has proven that buyers get better outcomes and greater value by excluding price as an evaluation criterion when hiring a professional services firm for projects in accounting, architecture, engineering, consulting, IT, research, communications, design, law, etc.
With QBS, firms are selected based upon their qualifications to do a project, instead of their low bid.
Here’s why including price as even a small part of the evaluation process gets buyers and taxpayers low value and higher costs….
- When price is even a small part of the evaluation process vendors know that if they aren’t one of the lowest prices – regardless of how qualified they may be – they will not win the project.
- This forces all vendors to interpret the project in it’s least viable form and to provide stripped down pricing for the least viable project knowing that the real cost of the project is likely higher and will be achieved using change-orders after they have won the project – a situation that creates project cost overruns and turns buyers and vendors into adversaries instead of partners.
- This does not mean that vendors are being deceptive – it is simply a consequence of having price as a part of the evaluation. It forces vendors to comply by writing stripped down, low priced proposals which lead to inaccurate project costs and compromised projects. Ever wonder why a new building awarded for construction at $100 million becomes $150 or $200 million by the time it is finished? Likely one of the most significant contributing factors, was that it was awarded using a process that included price as one of the evaluation criteria.
- By removing price, the QBS process means vendors focus on demonstrating why they are the most qualified firm to do a project knowing that if they are selected based on their expertise, they will then be able to discuss and negotiate a REAL price and scope, instead of blindly providing a LEAST VIABLE low-bid.
- It is important to remember that if during the negotiation, the buyer feels that the vendor that has been selected is now trying to overcharge, the buyer is free to cease negotiations and move onto discussions with the second most qualified firm. This protects against overcharging that many fear will happen if low price is not part of the selection of the firm.
What is NOT QBS?
- “Best Value” as a generic procurement term is usually just another phrase for “low-bid RFP” and is not QBS (with the exception of the Arizona State University Best Value Procurement Methodology)
- Any RFP that includes price as part of the evaluation process (no matter how low price is weighted) is not QBS – even if qualifications are part of the evaluation process
- Any procurement methodology that evaluates price as part of the selection process is not QBS
While low-bid processes are appropriate for commodity goods, they are inappropriate, ineffective, and far too costly for use when procuring professional services.