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QBS, QCBS, LCS: What are they, and how are they different?

In planning to respond to a Request for Proposals, Invitation to Tender, or some other kind of solicitation, one of the crucial steps is to determine the evaluation method the procuring team intends to use to select the suitable candidate to award a contract. In knowing what criteria will be used when submissions are being evaluated, you, as the Consultant, Contractor, or Vendor (of goods and/or services), can properly strategise preparation of your response, to increase your chances of being favourably considered.

However, in the procurement world – like many specialist fields – lots of abbreviations and jargons are bandied about, which can be confusing to most. Here, we will demystify three key, and frequently used, selection/evaluation methods:

• Quality-Based Selection
• Quality-Cost-Based Selection
• Least Cost Selection

Quality-Based Selection (QBS)

Typically, QBS is used when the emphasis is on securing the most competent candidate. Selection is thus based on the quality of the proposals submitted, which tends to be limited to the technical proposals only.

Under QBS, financial proposals (or other similar documentation proposing the project cost) are not immediately included in the evaluation process. If financial proposals must be submitted at the same time as the technical proposals, the two-envelope system is typically used – where, though submitted at the same time, the technical proposal and the financial proposal are placed in separate envelopes.

Once the highest-ranked technical proposal is determined, the corresponding financial proposal would then be opened, and its owner is invited to negotiate with the procuring team. When those negotiations are successfully concluded, the financial proposals submitted by other bidders, should be returned unopened.

Quality Cost-Based Selection (QCBS)

Under QCBS, both the technical and financial proposals are used to determine the wining submission. Typically, the technical and financial proposals are submitted at the same time in separate sealed envelopes (two-envelope system).

The evaluation methodology employed aims to identify the strongest technical proposal at the best price. Hence, each submission’s technical proposal scores and financial proposal scores are weighted, based on the quality-cost balance the procurement team wants to apply, and the weighted scores summed, to produce the final results. So, for example, the weighting could be as follows:

• Weight assigned to technical proposal = 80%
• Weight assigned to financial proposal = 20%

The technical proposals are evaluated first. The score assigned to each proposal is then weighted as prescribed.

Thereafter, the financial proposals are evaluated. Typically, the lowest-priced financial proposal is awarded the full weighted score. Using the above weights, that would be 20%. The weighted scores of the other financial proposals are calculated as a fraction of the highest scoring proposal. So, if the lowest priced proposal was $X, the weighted scores for another submission, for which the proposed price was $A, would calculated as ($A/$X), multiplied by weight assigned financial proposals (20%). Hence, their final weighted scores will always be less than that of the lowest-priced financial proposal.

Once the weighted technical scores and weighted financial scores are determined for each set of submissions, they are summed, to determine the final scores, and which is the winning submission

Least-Cost Selection (LCS)

For the LCS method, although the financial proposal will be the basis upon which the winning submission is determined, the quality of the technical proposal, is still a crucial consideration. Once again, both the technical and financial proposal are usually submitted using the two-envelope system.

The technical proposals are opened first and evaluated, based on the evaluation criteria specified in the solicitation documents. The proposals that achieve meet or exceed the minimum technical score, will have their financial proposals opened. Those below that score, are rejected, and their financial proposals should be returned unopened.

The qualifying financial proposals are opened, and the lowest-priced financial proposal is considered the winner of the contract.

However, it should be noted that the strongest technical proposal is not automatically selected. Any of the technical proposals that achieve the minimum score are eligible for consideration, but has the lowest project price will win.

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Image:  Wokandapix (Pixabay)