Although an initial review of the offers received is done at the bid opening event, a preliminary examination of the offers is done at the beginning of the evaluation process to determine, the responsiveness of the offers to the solicitation documents. After that, a detailed examination is done only of the offers that complied with (were responsive to) the requirements of the solicitation documents.
In the case of solicitations for goods and works procurement, after confirming compliance with the technical requirements, a comparison of the proposed price is made, and the offer that is technically compliant, and with the lowest evaluated bid price, is the one that is recommended for contract award.
When evaluating consultants, individuals or firms, the technical qualifications are also initially assessed. For individual consultant selection, once the technical qualifications are determined, the consultant obtaining the highest technical score above the minimum technical qualifying mark is requested to submit a financial offer and to negotiate a contract libido-portugal.com/.
In the case of consulting firms, depending on the procurement method, the selection could be similar to that of individual consultants (as indicated above) or the final selection could be determined by scoring and assigning weights to both the technical and financial evaluation. The highest ranked consultant resulting from the sum of the combined technical and financial scores would be recommended for invitation to negotiate the contract.
The result of the bid or proposal evaluation process is dependent on the procurement method and the procedures for determining the selected supplier, contractor or service provider that will be recommended for negotiations and/or contract award.
Share your thoughts on the bid evaluation process. Leave a comment.
My question is, I do work in a procurement office but when it comes to evaluation it isn’t a must that the lowest bid wins the contract, which is the way forward of awarding contractors?
I’d need a bit more detail to answer your question. It depends on the situation and the reason why the contract cannot be awarded to the lowest bidder. In order to award to the lowest bidder, they must be responsive and meet all the technical requirements stated in the invitation for bids.
Awarding the contract to the lowest bidder is not always the case. Bid evaluation panel should always consider the technical, financial and reliable ability of the bidders while reviewing bids. Cheap price is not always the best and this has to be understood from the bids submitted by the vendor.
I have faced many such situation that some vendors intentionally provide lower cost in their tender documents to involve themselves in the selection panel and later start kind of excuses that completely damper the entire process. Some vendors may not have sufficient information or knowledge for the proposed goods/services or work tendered and due to this they just bid to get involved in the process that later leads the process in complication and finally the delays drastically affect the operations. Vendor background check in terms of capability from all aspects, past experience, stock availability and all these factors must be evaluated before placing any award.
I’ve also had similar experience and agree contracts should not be awarded solely based on price. There are administrative, technical and commercial requirements to consider. And the price also needs to be reasonable. A contract should not be awarded if the price is unreasonably low or high. On your last point (vendor background, etc.), post-qualification verification needs to be undertaken to confirm the information provided by the recommended bidder.
It is not a must for the lowest bidder to be awarded a contract. It depends on the bidder’s financial and technical proposal i.e they are the lowest bidder but according to the evaluation results they have not meet both financial and technical requirements.
I agree…
In a procurement document mention is made that the bidder should submit a sample of the product proposed. If two bidders meet the technical criteria, with a difference in price. Can the contract be awarded to the bidder who has proposed a sample that “seem to be of better quality”, even if it is more expensive, by the evaluation team. (de visu evaluation)
All things being equal, the evaluation panel would need more than “seem to be of better quality” to justify their recommendation. Their recommendation should leave no doubt that the higher priced bid is truly offering a better quality product.
The Common terms used are Lowest Evaluated Responsive bid or Most Economic Advantage Tender which simply means ” the lowest price bid amongst the bids that meets all the technical requirements and standards as contained in the tender document”. In order words the bidder must be responsive both technically and financially. In financial evaluation, the evaluator must be able to compare apples with apples not apples with oranges. Concrete used in civil works consists of fine aggregates (sand), Coarse aggregates (chippings, stones, gravel), Cement and water.
Simple Calculation for 1 cubic meter of Concrete
0.5m3 sand + 1m3 gravel + cement + water = 1m3 Concrete
Mixture of half cubic meter sand, one cubic meter of gravel and a portion mix of cement (for the required strength of the concrete) plus water, there will be about one cubic meter of volume
For example Grade 25 Concrete:
0.5m3 sand + 1m3 gravel + 8 bags x 50kg cement + water = 1m3 Concrete C25 grade
Therefore, for a bidder to price for a cubic metre of grade 25 concrete, he must take all those elements into consideration including cost of placement and profit.
Based on this basic calculation, the evaluator will be able to determine whether the unit price is financially responsive or not.
In conclusion it is not always that the lowest price bidder wins based on comparison of bid price of the key items in the bid document.
James,
I agree, determining price reasonableness is important in reaching a final conclusion on the outcome of the evaluation process. And it’s also not a matter of just recommending the lowest bidder. A low price could be unreasonable and could result in a failed procurement. In your example, the evaluation panel’s conclusion would have to be based on the evaluation criteria and the specifications mentioned in the bidding documents.
A contract is not necessarily awarded to the bidder with the lowest bid price. Award is made to the lowest responsive evaluated bidder. This means, depending on the requirements, the bidder has been responsive to the legal and commercial requirements and defined specifications indicated in the tender documents from the preliminary examinations. The bidder must comply with all evaluation criteria defined in the tender documents during detailed evaluation. After prices have been evaluated for errors etc. and corrections made to have the evaluated bid prices, the evaluated prices of all bids determined to be responsive by satisfying evaluation requirements are compared. At this stage of the evaluation, the bidder with the lowest evaluated price is recommended for award of contract. Therefore, a bidder may offer the lowest price, but may not be awarded the contract because his/her bid is not responsive to the evaluation criteria specified in the tender documents. Thus, the lowest responsive evaluated bid is not necessarily the bid received with the lowest price.
Aaron,
Thanks for your comment and detailed explanation.
This is very important for procurement practitioners to understand.
I entirely agree with you.
How can we differentiate the highest evaluated tender from the lowest evaluated tender?
An interesting question…
In the bid evaluation process, price evaluation and comparison is done only after the bidder’s responsiveness to administrative and technical requirements have been established.
It is not a question of who has the highest or the lowest price, but who complied with the administrative and technical requirements indicated in the bidding documents. Only after this is determined can a review of the prices be done among those bidders who met the requirements. It is at this point that it makes logical sense to recommend award to the lowest bidder because there is no basis for paying a higher price if the only difference between the offers is the price.
It may be argued that there are other considerations to bear in mind besides price, even after determining the administrative and technical requirements, but the only factors that can be taken into account when evaluating bids, are those that were clearly stipulated in the bidding documents and not what the evaluation panels “feel” they should take into consideration. In other words, the evaluation criteria cannot be arbitrarily set by the evaluation panel.