In addition to the question of which of a range of bids offers the lowest cost of electricity, bid evaluation processes will often seek to recognize different bids’ implications for domestic employment and incomes. The most rigorous approach to this question would involve the use of a macroeconomic model (such as the classic ‘Input-Output’-type models, or the more recently developed Computerised General Equilibrium - CGE - models). However, such modelling exercises can be time consuming, and impractical in the context of a time-limited procurement process.
Often, then, a requirement will be imposed - or agreed - that bidders must agree to source a minimum percentage of project procurement domestically (i.e. within the host country). Although this percentage could be imposed unilaterally at the outset of the bidding process, sometimes it will be developed jointly in negotiation with the winning bidder; the final agreement signed with that bidder may include provisions specifying that failure to deliver on the agreed percentage can result in a bidder’s exposure to liquidated damages according to a predetermined scale (i.e. $X million for every percentage point by which domestic procurement is less than the target written into the contract.
It should be recognized that a number of potential tradeoffs underlie the specification of minimum domestic content targets. For example, the cost of the project may be increased insofar as local suppliers are not fully qualified in the delivery of “nuclear grade” components. Such costs may manifest themselves in terms of either higher component prices (where higher prices reflect the cost of training staff and implementing more stringent Quality Assurance programmes) or else in terms of schedule delays (potentially to allow rework). It may be possible to provide bidders in advance with an “inventory” of potential domestic suppliers in order to allow them to develop a better understanding of what constitutes a ‘reasonable’ domestic content percentage: one which balances a desire for domestic economic benefits with a recognition of possible cost implications. It should also be noted that - other things being equal - a more expensive bid may be associated with a higher (positive) economic impact in the short term, but in a negative impact in the longer term (via future economic impacts from higher electricity prices, particularly on energy-intensive industries).