The document discusses life cycle costing (LCC) in government procurement. It states that the single greatest factor agencies consider is cost. Regulations in Arizona and the codes of 44 U.S. states and 77% of Canadian provinces allow awards to be based on LCC. The Pennsylvania procurement code also specifically includes "total or life cycle costs" as objectively measurable criteria that can affect the bid price and be considered in evaluations. The benefits of LCC are listed as eliminating risk of ownership, being a preferred purchasing method, promoting accountability, enabling more with less, giving equal opportunity, attracting qualified bidders, providing highest quality, and allowing absolute budget certainty.

1. NACD Governmental Sales Division
Life Cycle Costing

2. NACD Governmental Sales Division
Single greatest determining factor for
government agencies when making a
purchase is _______________.$$$ price $$$

3. NACD Governmental Sales Division
Did you know?
Bids shall be evaluated to determine which bidder offers the lowest
cost to the state in accordance with the evaluation criteria set forth in
the Invitation for Bids. Only objectively measurable criteria that are
set forth in the Invitation for Bids shall be applied in determining the
lowest bidder. Examples of such criteria include…life cycle cost
formulae. Evaluation factors need not be precise predictors of actual
future costs, but to the extent possible the evaluation factors shall be
reasonable estimates based upon information the procurement officer
has available concerning future use.
–Arizona Procurement Rules
LCC Example
10 (77%) Provinces allow awards based on LCC
44 (88%) States allow awards based on LCC

4. NACD Governmental Sales Division
PA Proc. Code §512.e  Bids shall be evaluated based on the
requirements set forth in the invitation for bids, which may include
criteria to determine acceptability such as inspection, testing, quality,
workmanship, delivery and suitability for a particular purpose. Those
criteria that will affect the bid price and be considered in evaluation
for award shall be objectively measurable, such as discounts,
transportation costs and total or life cycle costs. The invitation for
bids shall set forth the evaluation criteria to be used. No criteria may
be used in bid evaluation that are not set forth in the invitation for
bids.
Does the State of Pennsylvania support LCC?

5. NACD Governmental Sales Division
PA Proc. Code §512.e  Bids shall be evaluated based on the
requirements set forth in the invitation for bids, which may include
criteria to determine acceptability such as inspection, testing, quality,
workmanship, delivery and suitability for a particular purpose. Those
criteria that will affect the bid price and be considered in evaluation
for award shall be objectively measurable, such as discounts,
transportation costs and total or life cycle costs. The invitation for
bids shall set forth the evaluation criteria to be used. No criteria may
be used in bid evaluation that are not set forth in the invitation for
bids.
Does the State of Pennsylvania support LCC?
…those criteria that affect the bid
price and be considered…such
as discounts, transportation
costs and total or life cycle costs.

6. NACD Governmental Sales Division
Eliminates the risk of ownership.
Preferred method of purchasing listed in most
governmental procurement codes.
Promotes accountability.
Enables you to accomplish more with less.
Gives all bidders an equal opportunity.
Designed to attract qualified bidders.
You get the highest quality product.
Benefits of LIFE CYCLE COSTING
You can budget with absolute certainty.

7. NACD Governmental Sales Division
Eliminates the risk of ownership.
Preferred method of purchasing listed in most
governmental procurement codes.
Promotes accountability.
Enables you to accomplish more with less.
Gives all bidders an equal opportunity.
Designed to attract qualified bidders.
You get the highest quality product.
Benefits of LIFE CYCLE COSTING
You can budget with absolute certainty.