Definition
Value for Money(VFM)
The optimum combination of cost and quality over the contract life.
Value for money is the principle that public buyers should achieve the best overall combination of quality, cost, sustainability and risk over the life of a contract, rather than simply choosing the cheapest bid. It underpins how evaluation criteria are weighted and how buyers justify their award decisions.
How value for money is assessed
Buyers typically use a most economically advantageous tender (MEAT) approach, weighting quality and price (and sometimes social value or sustainability) according to what matters most for that specific contract, then scoring bids against published criteria to identify the best overall value.
Value for money is judged over the whole life of the contract, not just the initial purchase price, so factors like implementation risk, ongoing running costs, quality of service delivery, and exit costs all matter.
- Combines quality, price, sustainability and risk, not price alone
- Assessed using published, weighted evaluation criteria
- Considers whole-life cost, not just upfront price
- Increasingly incorporates social value and sustainability considerations
What this means for how suppliers bid
Suppliers who focus purely on undercutting competitors on price can lose to bids that demonstrate stronger overall value, particularly where quality and social value carry meaningful weighting. Understanding and directly addressing the published evaluation criteria, rather than assuming price wins, is essential to a competitive bid.
Frequently asked questions
- Does the cheapest bid always win a public tender?
- No. Buyers assess value for money using weighted criteria that usually combine quality, price and sometimes social value or sustainability, so a more expensive bid can win if it scores significantly higher on quality and other weighted factors.
- What is MEAT in procurement?
- MEAT stands for most economically advantageous tender, the standard approach where bids are evaluated against a combination of price and quality criteria, weighted according to their importance for that contract, rather than awarding purely on lowest price.
- How can I demonstrate value for money in my bid?
- Address every published evaluation criterion directly with specific evidence, quantify benefits and risk mitigation where possible, and be realistic about whole-life costs rather than only quoting an attractive headline price that ignores implementation or ongoing costs.
Related terms