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multiplied by the score to give an overall score. Table 9.2 shows a sample weighted

scoring model using some of the evaluation criteria shown earlier. The scores are
assigned a value of 1 to 5, with 5 being the highest score a vendor can earn. You
multiply the weight by the score for each element and then sum the totals to come up
with an overall score for each vendor. You would almost always choose the vendor with
the highest score using this selection method.

TABLE 9.2 Weighted scoring model

Criteria Weight Vendor A Vendor A Vendor B Vendor B
Score Total Score Total

Understand 5 2 10 4 20
requirements

Cost 3 3 9 4 12

Experience 4 1 4 2 8

Financial stability 3 4 12 3 9

Final weighted 35 49
score

In this example, vendor B has the highest score and is the vendor you should choose.

Sole-Source Documentation

Sometimes you’ll have a procurement situation where you can use only one vendor
to fulfill your needs. For example, suppose you have a computer system that is

unique to your line of business. You’ve used that software for several years and are
ready for an upgrade. You don’t want to go through the headache of installing a
new system—you simply want to update the one you already have. This situation
calls for a sole-source procurement because there’s only one vendor that can meet
your requirements.

Types of Contracts

A contract is a legal, mutually binding document that describes the goods or services

that will be provided, the costs of the goods or services, and any penalties for
noncompliance. Most contracts fall into one of the following categories: fixed-price
contracts, cost-reimbursable contracts, and time and materials contracts. Let’s take a
closer look at each of these here:

Fixed-Price Contract A fixed-price contract states a fixed fee or price for the goods
or services provided. This type of contract works best when the product is very well
defined and the statement of work is clear and concise. Using a fixed-price contract for

a product or service that is not well defined or has never been done before is risky for

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