BS 6

Question : Comments ? A bidding document for a major construction estimated at Rs 300'm, required a bid security in a form of a bank guarantee (BG) or a Letter of Credit (LC) or a cash deposit (CD), for an amount equivalent to 1% of bid amount. Bids were to be valid 91 days from the deadline for submission of bids. The bid security shall be valid 28 days beyond the validity of bids. Bids were closed on September 2, 2004. Details of some of the bid securities furnished by bidders are as follows: Bidder Bid value (LKR) 352 345 345 378 355 353 Value Type Validity date
I

A B C D E F

Rs 3.52 m US$ 34,300 Rs 3.45 m US$ 39,000 Rs. 3.25 i-n

BG LC IB BG BG

Dee 30, 2006 Dec 31, 2006 Dec 30, 2006 Dec 30, 2006 Dec 30, 2006 Dec 30, 2006

3.53 (Only a photo copy of a BG, submitted with bid; the original received 2 days later

ens -tc. -)

n m en nnn U , 3 , D - t Z- , O V V
FT

Lk-

ucc -)

I , /-VVO

H I

330 348

Rs. 3.3 m Rs. 3.5 rn

BG BG

Dec. 2, 2006 Dec 29, 2006

[Note: The official exchange rate on Sep 2, 2006 was 99.0 and on December 2, 2006 was 100.0; 345199 = 3.484848; ; 37811 99 = 3.818182; 423/99= 4.2727271 Which of the above bid securities you consider as acceptable?
BS 7 An After agency invited quotations from 7 bidders on in National respect of Printing, Supply and Delivery of Booklets are bidding period of 7 days, there were only 3 responses as follows: The Bidder Price Letter A 5,455,312 B 3,124,875 C 5,462,859 lowest bidder "B"'s did not submit a Bid Security of Invitation. Shopping basis (18,750 Nos). and bid prices

as requested in the

The TEC recommendation is that the 2nd lowest, "Bidder A ", be awarded since the bidder which submitted the lowest quotation did not submit the Bid Security. Can the bid "B" be accepted due to following reasons? 1. The price difference between the lowest quotation and the 2nd lowest is Rs.2,330,437.50, for printing of Booklets, which is a substantial. 2. The bidder who submitted the lowest quotation subsequently sent a letter stating that, he could not send the Bank Guarantee and ready to do so now. 3. The delivery period is 21 days which is considered as a very short period TECHNICAL COMPLIANCE TC 1 A supplier submitted a bid on a piece of equipment which he said fully met the bid specifications and attached a catalogue sheet to his bid submission. There was a discrepancy between the specifications detailed in the offer and the specifications printed on the catalogue sheet; those on the latter did not meet the requirements laid out in the bid specifications whereas those stated in the bid complied. The PE disqualified the bid (which was the lowest price) on the grounds that the specifications were not met as evidenced by the catalogue sheet. The bidder argued that his did comply as lie had undertaken in his offer specifically to supply according to the technical specifications in the bid document and the catalogue sheet was only a reference material. Therefore, he said he l should be awarded the contract as the owest evaluated bid. What should the Purchaser do? An implementation agency called for bids for a container crane with a minimum lifting capacity of 40.6 metric tons. A bidder quoted his price i iuf we standard container crane tie manufactures, which has an operating capacity of 40 metric tons. The executing agency decided to disqualify the bidder because it did not meet the minimum specified lifting capacity. Is the bid substantially responsive and acceptable? For a transmission line project, a PE invited bids for 100 km of aluminum core steel reinforced conductors. The bid specification stipulated, among other things, that the aluminum should be a minimum of 95% purity. When the bids were evaluated, the PE proposed award to the second lowest evaluated bidder on the argument that he offered conductors with 97% purity, and the additional cost was more than balanced by the reduced losses in conduction. The bidding documents merely specified the minimum threshold for purity. How will you address this issue? The bidding documents for some process equipment included a capacity and performance specifications. During the evaluation process, the PE found that the two lowest responsive bids (from Firms A and B) met all the technical requirement but that the second lowest bidder (Firm B) had included some features which the PE considered non-essential and over and above those called for in the specification. The PE proceeded 10

TC Z

TC 3

TC 4

to deduct the value of these features from B's price. This deduction made B's bid lower than A's and the PE recommended that the contract be awarded to B. is this the correct treatment of the bid? TC 5 A project included the procurement of 4wheel drive vehicles to be procured by ICB. The technical specifications stated the following: Type Fuel Engine Wheel Base Suspension Fuel Tank Ground Clearance Transmission 4 wheel drive Diesel 175HP at 4500 RMP 21 feet 6 inches Heavy Duty 70 liters 15 cms. Standard Shift

Eight bids were received with the required bid security and required documents. The PE, as a result of bid evaluation, rejected all but the highest bid on the basis that the, failed to comply with one or more of the technical specifications listed above. Question: a) Do these specifications meet the concept of good equipment specs? b) What should the bidders have done when they received the bidding documents? c) If you had received a query from the bidders, what would you have done? 4 d) If you had t o r1pnr thic hid wcu!d yc~u Z:vz scn', ' , L c no objection to issue the bid documents? TC 6 In an agricultural project in Latin America, the PE invited bids for a plant for producing sugar cane juice from sugar cane. In the detailed specifications, it was stated that the cane should be crushed using steel rollers powered by an A.C. electric motor operating at 220 volts SO cycles; there should be three stages of rollers. The first stage with rollers diameter of 200 cm rotating at 5 rpm and the second stage with rollers of 100 cm rotating at 25 rpm and the final stage with rollers of 10 cm diameter rotating at 100 rpm. Four bids were received. In the evaluation, the PE rejected the lowest bid from Australia and proposed award to the second lowest bid from Brazil. The Australian bidder protested claiming that he had offered a well proven machine widely used all over Asia. Bank queried the PE who responded that the Australian machine was technically non-responsive because it used only two stages of steel rollers instead of three and with different diameters and speed, and hence, failed to comply with the bid specification. Moreover, the PE had no prior experience with such a machine. Question: How do you analyse ?

11

BID COMPARISION BC 1

The five bids for construction of the hospital, clinic and powerhouse were after technical evaluation: US$ Foreign Company 1 1,820,000 Foreign Company 2 1,890,000 Local/Foreign 3 1,970,000 Foreign Company 4 2,247,000 Foreign Company 5 2,647,000
1.

The Government's estimate for the work was US$1,200,000. The low bid is therefore 50% higher than had been expected. At least three alternatives are open to the Government as to what should be done in this case: (a) Reject all bids and call for new bids; (b) or (c) Award the contract to the low bidder but cut down the work called for in the contract, to somewhere nearer US $1,200,000;

2.

Reject all bids and enter into negotiations with the low bidder or a few low bidders to find out why they have come in so high and try to alleviate that problem. 3. Keeping in mind (i) the time delay and additional cost in going out for new bids, (ii) the technica l difficulties in "redesigning" the project so an award could be made on a slimmed down basis, (iii) the lack of competition in awarding the contract according to the "new" design, and (iv) the possibilities for unfair pressure on bidders, and the potential for lack of competition in a negotiation situation: (a) Which of the three courses set out above would you follow, and why? (b) If you chose (a) above what steps would you take to expedite the new bidding? and (c) BC 2: Discount If you chose course (c) above which company or companies would you invite to enter into negotiations, and why? The bidding documents require that the bid should be valid for a period of 90 days from the deadline for submission of bids. Five bids have been received by the Agency. Some of the bidders offered discounts in different manner as follows. Original Bid Price 25 M Condition Bid price if Discount is considered 23.5 M

Name

6 % discount if awarded within 60 days

12

B C

26 M 24 M

None

26 M 22.8 M

5 9/o discount i f awarded within 90 days

27 M

10

discount

with

24.3 M

modification letter submitted along with the bid. E 25.8 M 12% discount with a letter, registered on the day before the submission of bid but Purchaser receive one day after bid close Agency processed the evaluation expeditiously within 30 days of bid 9 1 opening and determined the bidder E at a contract price of 22.7 M as the lowest responsive after taking into account the discount of 12 % along with the discounts offered by other bidders. a)
b) Is the decision of the Agency Correct? Which of the above bids that you consider as substantial responsive? What is your recommendation for the award of contract?

22.7 M

c) BC 3: Loading

The bid documents for water pipe and fittings contained alternate f... -Ccncrctc ai-id st&z:: P;Ytf, '1111JUJIfir, the for internal and external coating. Six bids were received, of requirements which the three lowest were close, varying from (local currency units) 5.3 million of 5.6 million, as follows:

Bidder No.1(steel pipe) Bidder No.2(steel pipe) Bidder No.3(Concrete pipe)

5.3 million 5.5 million 5.6 million cathodic

During evaluation, the Executing Agency decided that protection should be provided if steel pipe were selected.

It, therefore, adjusted the bids for steel pipe by adding to the bid price the cost of providing cathodic protection, even though the bid documents neither required cathodic protection to be included in the prices quoted for steel pipe nor stated that it would be used as a factor in the evaluation of bids. The Executing Agency based its decision on the statement in the bid documents that "to determine the lowest responsive bid, operation and maintenanc costs will also be considered".
e

13

After adjustment of the bid prices quoted by bidders Nos.1 and 2 for steel pipes, Bid No.3 became the lowest evaluated bid. The Executing Agency, accordingly, proposed award of the contract to Bidder NO 3. Questions: Do you agree with the evaluation of bids by the Executing Agency? If not, which bidder should be awarded the contract? Assuming that cathodic protection of steel pipe was needed, how should the Executing Agency proceed to procure it? POST QUALLIFICCATION The PIU using NCB method issued standard BD for works for patching potholes and repairs for an urban road with an estimated value of about $200,000. Evaluation of bids was to be based on a post qualification process of the bids using the standard criteria provided in the Bank BD for small works. By bid closing date, five bids were received and the lowest priced bid was lacking data on audited financial statements. You are the chairman of the evaluation committee. Should this bidder be recommended for award of the contract

POQ 1:

POO. 2:

On an NCB procurement, for the procurement of civil works for the reinforcement of river embankments, estimated to cost US$3.3 million, the Employer received a complaint from a bidder, ANDERSON, that it had submitted the lowest-priced bid but that the TEC had rejected its bid incorrectly. Upon reviewing the bid evaluation report prepared by the TEC, the PC f3ur,d ANDERSON ;idd, indeed, submiiied me iowest-priced bid but that the TEC had rejected its bid on the grounds that ANDERSON did not possess the required experience, as defined in the bidding documents, namely that "bidders should have completed at least two contracts of similar nature and complexity in the past five years". In its bid, Anderson provided a list of the demonstrate its past experience: Name of Contract following contracts to Year of Completion 2002 2003

Contract Price (m) Civil Works for the Reinforcement of River US$4.0 Embankments Civil Works for the Reinforcement of River US$4.5 Embankments

However, ANDERSON's bid indicated that the two contracts cited had, in fact, been performed by a company, ANDERSON -BOB, which is a company wholly owned by ANDERSON, although it is a separate legal entity. The TEC's bid evaluation report recorded that, because ANDERSON BOB is a separate legal entity from ANDERSON. ANDERSON cannot rely 14

on ANDERSON - BOB's experience in attempting to demonstrate its own experience. In its letter of complaint, ANDERSON protested that, because it fully owns ANDERSON - BOB, its experience should be counted as ANDERSON's experience and that ANDERSON should, therefore, be awarded the contract.
Question How should you respond to Anderson's complaint?

POQ 3: Procurem ent of Computer s

An Agency invited bids for 100 PCs for supply to an education institution. In respect of post qualification criteria, bidding document required that the bidder shall be original manufacturers and the PC offered shall be a model which is mass produced, has been previously supplied, and in use in an Asian country, and has a proven experience of at least 24 months. Five bids were received. In its evaluation PE rej ected iected bid K, L and M and recommended award to P on the grounds that Bid K was not submitted by a manufacturer, Bid L had not supplied in Asia and Bid M did not fulfill the minimum proven experience. Bidder M protested that the PC offered by him was indeed in proven service for 28 months on the date of evaluation even though it was in proven service for only 23 months on the date of bid opening. Bid K LKR 10. 5 m CIP Colombo Bid L LKR 10.9 m CIP Colombo Bid M LKR 10.7 m CIP Colombo Bid N LKR 11.8 m CIP Colombo Bid P LKR 11.3 m CIP Colombo To whom you will award the contract? CONTRACT AWARD A number of responsive bids at reasonable prices from various suppliers were received through ICB. However, the PE found subsequently that he could buy the item tor which bids were caked from a iocal 1 11111 (wlmm y had not bid) at a price lower than an of the bids received. The PE proposed to reject all bids and procure this item (without any change in the specifications) through direct purchase from the local firm. Is this a good proposal? Is it acceptable under Procurement Guidelines? Analyse the case and give your recommendation for future

CA 1:

CA 2:

Government of Ruritania in July 2008, using NCB method issued Bank standard BD for small works for construction of a Teacher Training Center estimated to cost about $150,000. By bid closing date, two bids were received and the lowest evaluated bidder had submitted a bid that was 40% less than the Engineer's estimate. You are the chairman of the evaluation committee. Should this bidder be recommended for award of the contract?

15

CA 3: Unbalanc ed Bid

During a post audit for procurement for rehabilitation of 10 schools estimated at Rs 30 m the following was observed: Three bids received: Bid A: Rs 26 m Bid B: Rs. 27.4 m Bid C: Rs. 27.5 m All three bids were substantially responsive. In the BC)Q for Bid A, the unit price quoted for windows was substantially lower than the other three bids and the estimated cost of the Engineer The TEC was concerned about the low rate and worried about that Bidder A will not complete the work satisfactorily The TEC requested the bidder to substantiate the cost of replacing windows, giving the breakdown of labour and material. The breakdown rate was higher than that was in the bid TEC did not want to take a risk and awarded the contract to Bidder B at Rs. 27.4 m

CONTRACT ADMINISTRATION CAD 1: Incoterm Pursuant to ICB process, an Agency placed a contract on a supplier in Germany for laboratory equipment for delivery CIF Incoterms at
CU'10111'00 FOrL.
an

Payment was to be made on the basis of a Letter of Credit on presentation of Clean Bill of Lading, and other documents. Goods were air-freighted g and the bidder submitted the Airway Bill, country of ori in certificate, invoice to the bank, which paid the contract price. "The Agency refused to take delivery [since the equipment was no more required by him] and sued the bank for refund of the money since the LC did not permit airway bill. Question - Is the bank right in having paid ? CAD 2: incoterms

Messrs Lemunge & Sons, a Tanzanian construction company, has ordered from Fibro A/5, a Danish manufacturer of building materials, 10,000 fiber boards of certain dimensions, Ex Works Aalborg, Denmark, at a price of Danish Kroner (DKK) 1,000,000. The agreed date of delivery is 1 May, 1992, and Fibro A/S confirms by telex to Lemunge & Sons on 20 April that the fiber boards will be available for delivery at Fibro A/S's premises on the date agreed. Lemunge & Sons instruct their forwarding agent in Denmark, Messrs Fixit, to pick .up the goods and forward them to the port of Dar es Sa 16