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Contract Negotiations and Award Recommendation

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At the conclusion of the evaluation process, the evaluation panel must both recommend and justify (i) either the rejection of all offers, (ii) proceeding with contract negotiations, or (iii) contract award. The evaluation panel’s recommendation is made to the approving authority.

Contracts for goods and works procurement are not usually negotiated, except under exceptional circumstances, depending on the complexity of the requirement. Complex requirements for supply, installation and commissioning may be better procured through negotiations with the highest technically qualified firm, as determined by the results of the evaluation of their technical proposals. Similarly, under works procurement, design and build requirements may also need to be negotiated; as well as, turnkey contract requirements.

In the case of consulting services, there are consulting firms and individual consultants. Contracts for these two categories of consultants are negotiated slightly differently.

For individual consultants, after the technical evaluation, the highest ranked consultant is invited to submit a financial offer and to negotiate the terms of the contract. If for some reason an agreement isn’t reached, the next highest ranked consultant may be invited, depending on the procedures, to submit a financial offer and to contract negotiations. The focus of the negotiations should be to reach an agreement on the Terms of Reference of the assignment, with minor modifications if necessary. Price negotiations should be kept to a minimum and should only take place if the financial offer is considered unreasonable based on documentary and/or historical evidence.

Negotiations with consulting firms are dependent on the procurement method used. Based on the procurement method, final selection will be determined either by:

(i) the sum of the weighted average of the technical and financial proposals (quality and cost based selection),

(ii) the lowest proposed price among the technically qualified consultants (least cost selection),

(iii) the reasonableness of the financial offer of the highest ranked consultant (selection based on qualifications, similar to the selection of individual consultants), or

(iv) the lowest proposed price among the technically qualified consultants within a stipulated budget (fixed budget selection).

In the first instance, the financial offer cannot be negotiated because it would be unfair to the other firms that participated in the process, because the price was a determining factor in the overall combined score that led to the selection of the consultant. Thus, only the technical aspects of the proposal can be negotiated. The focus of the negotiations should be on resolving weaknesses observed in the selected consultant’s technical proposal and reaching agreement on the terms and conditions of the contract libido-portugal.com/.

Price cannot be a negotiating point in the second instance because the selection was price-based.

In the third instance, given that the price was not a determining factor in the final selection of the consultant, but rather the highest technical score, the price can be negotiated if found unreasonably high.

Evaluation of Offers: Preliminary Considerations

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Before beginning the evaluation of offers (bids/proposals) received, an evaluation panel should be formed and approved. Ideally, procurement practitioners should advise, oversee the evaluation process and assist with the drafting of the evaluation report, but they should not be members of the evaluation panel. Procurement practitioners cannot be expected to be technical experts on all requirements, but to have an in-depth knowledge of the procurement aspect of the requirement; additionally, it is healthy to practice separation of functions in order to prevent any one entity or individual from exercising control over the entire procurement process.

Membership of the evaluation panel should be determined based on the qualifications of each prospective member. Evaluation panel members should preferably have knowledge and related experience, and at least one member should have participated in the drafting of the terms of reference or technical specifications and/or other technical documents required for inclusion in the solicitation documents. The number of evaluation panel members should be at least three, excluding any observers and technical experts invited as advisors on the technical aspects of the requirement.

Conflict of interest is a serious concern that must be considered before beginning the evaluation process sverige-ed.com. All prospective members of the evaluation panel should sign a confidentiality and non-disclosure agreement wherein they are expected to declare absence of any family or business ties with firms and/or individuals to be evaluated. Additionally, after the names of the firms and/or individuals to be evaluated are made known to the evaluators, all panel members are expected to declare any potential or actual conflict of interest that may exists due to any past or present relationship that they may have or may have had with any of the firms and/or individuals to be evaluated, that may impede their ability to impartially evaluate any of the offers received.

Any other considerations to bear in mind? Leave a comment.

Receiving and Opening Offers (Bids/Proposals)

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After the site visit and/or pre-bid meeting, the following could result:

  • the selection process continues to the opening date and time as planned,
  • the submission date is extended by addendum to give bidders a reasonable amount of time to submit their bids/proposals (especially if there are changes to the solicitation documents), or
  • the requirement is altogether cancelled.

Assuming that the process continues as expected, receiving and opening offers (bids/proposals) is the next step.

Receiving Offers

The date, time and place for receiving offers, including the manner in which they should be marked and sealed, must be clearly stated in the solicitation documents. It is the bidders’ responsibility to ensure that their offers are submitted at the correct place, date and time. The entity receiving the bids or proposals, as stipulated in the solicitation documents, must ensure that the package(s) in which the offers are received are dated and time-stamped and placed in a secured area prior to the day of the public opening event. The procuring entity should also keep a list of the offers received by name of bidder, date and time the offer was received, and the number of packages received for each.

Opening Offers

The opening of offers should take place immediately after they are received. This should also be stipulated in the solicitation documents. Once the offers are received, those received on time should be publicly opened at the place and time stipulated in the solicitation documents.

Offers received late are usually returned unopened to the respective bidders. When considering the rejection of a late offer, it is important to be guided by the language used in the solicitation documents, because this language will determine if there is any flexibility in accepting late documents. For instance, if it is stated in the solicitation documents that late offers “may” be rejected, then a rejection of late offers would depend on the circumstances that caused the document to be submitted late and on the approving authority’s willingness to accept the offer(s) received late. In contrast, if the solicitation documents state that late offers “shall” or “will” be rejected, then offers received late cannot be accepted for evaluation purposes regardless of the reasons why they were received late.

It’s important to note that the reason for late reception of offers is not always the result of negligence on the part of the bidder. It could be for reasons beyond their control, so if the solicitation documents permit a decision to be made on the acceptance or rejection of a late offer, then the acceptance of a late submission would be determined only by the approving authority. Preferably, though, such need for decision should be anticipated and regulated in order to avoid arbitrary actions on the part of the approving authority.

As mentioned above, offers should be opened soon after they are received, ideally on the same day libido-portugal.com/. If this is not possible, they should be opened the next day. The opening of offers is a formal process and the details of the event should be recorded in the minutes of the opening event. The opening of offers is also a public event, were bidders are requested to attend, and the public at large should be permitted to witness the event, if they so desire.

At the opening event, offers received are examined to determine if they are compliant with the instructions of the solicitation documents. A checklist is used for this purpose. As a common practice, the names of the firms submitting offers are listed on a board for all present at the opening event to see, and the price of each offer (depending on the procurement method) is also placed on the same list. In cases where the technical proposals are evaluated first, the financial offer is not read out until the results of the technical evaluation are known. Then the respective bidders are invited to attend the public opening of their financial offers.

At the public opening of offers, discussions should be limited to clarifying the names of the bidders, if there are confusions; but bidders should not be permitted to discuss or clarify the content of their offers, because at that stage the offer has already been received and bidders should not be allowed to changed their bids after the closing date and time of submission; furthermore, it’s up to the evaluation panel to determine the need for clarification and to request the same, through the procuring entity, from the respective bidder(s).

The rejection or acceptance of an offer should not be addressed at the public opening event.

Although a summary examination of the offer submission package is done at the opening event to determine compliance with the requirements of the solicitation documents, the preliminary and detailed examination of the offers received should be left for the Evaluation Panel to complete during the evaluation process.

Pre-Bid Meetings and Site Visits

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Pre-bid meetings are usually held, if previously mentioned in the solicitation documents, during the bid/proposal preparation period. Their purpose is to clarify any concerns bidders may have with the solicitation documents, scope of work and other details of the requirement. These meetings are formal and the results are made available in writing to all prospective bidders that registered interest in the requirement, be it through requesting, buying or downloading the solicitation documents from an official website. Prospective bidders are permitted to request clarifications by a date and time stipulated in the solicitation documents.

It is most beneficial to hold pre-bid meetings prior to formally responding to the request for clarifications, that way the responses to the request for clarifications can be sent along with the results of the pre-bid meeting, including a copy of the minutes of the pre-bid meeting.

Although prospective bidders should be encouraged to get as much information as possible (including visiting the site) on a specific or upcoming requirement of a procuring entity, formal site visits are usually planned and carried out for works procurement and more complex goods requirements southafrica-ed.com.

When a site visit is planned, the details of the date and time must be stated in the solicitation documents. And the site visit should take place before (but not too far in advance of) the pre-bid meeting. The results are also formally sent to all prospective bidders that expressed interest in the requirement, by way of minutes of the site visit and pre-bid meeting, including consolidated responses to request for clarifications, also from prospective bidders.

The pre-bid meeting is usually open to all interested prospective bidders; however, in cases where pre-qualification or short-listing is carried out, only pre-qualified or short-listed bidders are invited to attend the pre-bid meeting.

Site visits, as mentioned above, can and should preferable be held prior to the pre-bid meeting. The reason for this preference is because after the site visit, bidders may have additional queries and these can be addressed at the pre-bid meeting and formally sent (with the minutes) to all prospective bidders that expressed interest in the requirement, or those that were short-listed through a pre-qualification exercise or restricted bidding process. The time and venue of these meetings are addressed in the solicitation documents, and attendance is usually not obligatory.

During the site visit the prospective bidders survey the site and ask questions to clarify any doubts or information provided in the solicitation documents. Sometimes, as a result of the site visit/pre-bid meeting there might be a need to extend the bid/proposal submission date by way of Addendum to the solicitation documents to give bidders sufficient time to address any changes made to the solicitation documents as a result of the site visit and/or pre-bid meeting.

Solicitation Documents (Preparation and Publication)

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Upon receipt of an approved procurement requisition, and after reviewing the technical specifications or terms of reference for completeness, the procuring entity is in a position to begin preparing the solicitation documents; otherwise, the procuring entity needs to establish contact with the requesting entity in order to get any missing information to complete the technical specifications or terms of reference before they can begin preparing the solicitation documents.

Solicitation documents are prepared from a template called standard bidding or tender documents, and information specific to the particular requirement, such as observed below, is used to complete the solicitation documents.

Assuming that the requirement is on the procurement plan, pertinent information needs to be obtained and agreed with the requesting entity prior to completing the solicitation documents libido-portugal.com/.

When completing solicitation documents, it’s important to:
• Have clear technical specifications or terms of reference
• Decide on the need for pre-bid or pre-proposal conference and/or site visit
• Determine if the requirement is for international or local competitive bidding
• Determine due date for request for clarifications on the solicitation documents,
• Decide on the deadline for submission of bids or proposals
• Obtain the name, address, phone number and email address of the client’s authorized point of contact for information on the requirement
• Determine bid/proposal validity period
• Determine need for bid security and/or performance security
• Determine bid/proposal evaluation criteria
• Identify and select evaluation panel members and observers
• Determine bid/proposal opening date

Once the solicitation documents are complete and approved, a procurement notice is prepared and posted to approved websites and internet portals, and also published in local and (if necessary) international newspapers.

Procurement Requisition Processing

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Once the procurement plan is prepared and approved, the requesting entities should begin submitting their requirements accordingly to the procuring entity for processing. When a procurement requisition is submitted, the first step in processing the request for procurement action is to determine exactly what is required. Although a general idea would already exists as a result of the requirements determination and procurement planning phases, it is at this point that the completed technical specifications or terms of reference should be sent to the procuring entity to start the procurement requisition process. The procuring entity in turn reviews the technical specification or terms of reference for completion. 
 
There must be sufficient detail in the description of the requirement to ensure that all prospective bidders or service providers have essentially the same understanding of the requirement. If the specifications are clear, and prepared in accordance with procurement procedures, the solicitation process can begin; if not, the procuring entity must seek clarification in order to finalize the solicitation documents accordingly. 
 
The proper description of the procurement requirement is essential to beginning the procurement process. If done correctly, it avoids disappointments and waste of resources resulting from purchasing goods and services that fail to fulfill the purpose intended because of improperly prepared technical specifications or terms of reference.
 
Completing the technical specifications and terms of reference later than scheduled will have an adverse impact on the execution of the procurement plan and the award of the contract, which in turn will cause delays in acquiring the goods and services.
 
It is important for the procuring entity, in coordination with the requesting entity, to determine in advance if technical expertise will be required to draft the technical specifications or terms of reference and if this expertise exists in-house or will also have to be procured. 
 
This exercise needs to be undertaken during the requirement determination phase, because if the expertise for preparing the technical specification or terms of reference must be hired, this in itself creates a procurement requirement that needs to be considered in the procurement planning process. This, consequently, will also require its own technical specifications or terms of reference completed and contract awarded far enough in advance for the hired individual to prepare the  technical specifications or terms of reference in time for the solicitation documents of the requirement in question to be prepared and the procurement process initiated as forecasted on the procurement plan. 
 
Independent of the technical expertise existing in-house, when technical specifications or terms of reference are unclear or lacking in other important elements, the procuring entity must seek clarification in an effort to resolve any apparent discrepancies before completing the solicitation documents. 
 
Ideally, the requesting entity should maintain an open dialogue with the procuring entity while preparing their technical specifications and terms of reference. Sharing informal versions and getting feedback from the procuring entity up until the final version is ready for formal submission. Doing this helps prevent rejection of the technical specifications or terms of reference for additional information, risking delaying the procurement process due to late submission of this most important document, without which the procurement process cannot begin.
 
When the procuring entity receives the technical specifications or terms of reference in a manner suitable for requesting offers, and with the proper fiscal authorization to commit the allocated funds, the procuring entity can begin preparing the solicitation documents southafrica-ed.com.