BIDDING AND TENDERING

Col Vivek Mathur, Retd

 Tendering/Bidding
• Tendering is the process by which bids are
invited from interested contractors to carry
out specific packages of construction work.
• Depending on the bid proposal the
construction companies make their bids for
submission, and if accepted, a legally
enforceable contract is created.

What is a tender?
A tender is your bid
 Tender
• Tender is an offer to deliver or provide specified
services or goods at a said rate.
• A tender means that you will offer a service/item at
a certain price.
• TENDER DOCUMENT-The Tender document
comprise the tenderer’s offer to the principle and
are submitted in response to the invitation to tender.
The principle document is the tender form, which is
issued with the enquiry documents and is completed
and signed by the tenderer.
• BID. A bid is defined as a deal or your response to
the offer to obtain something in a competition
 Methods of Tendering
Competitive Tendering
1. Openly invited tenders (Open tendering)
2. Pre-qualified tenders (Open tendering)
3. Pre-registered tenders (Open/Restricted tendering)
4. Selected tenders (Restricted tendering)
Negotiated Tender
1. Serial.
2. Nominated.
 Competitive Tendering
• In this method, contractors are invited by public
advertisement to submit tenders for the work.
• This method is widely used, and an openly advertised call
for bids is given.
• This is the recommended form of tendering as per
government norms.
• In India, for government agencies, competitive tender has
to be resorted to if value of tender is >= 25 Lacs.
• Advertisement in Indian Trade Journal (ITJ) and leading
newspapers.
• Now done online at https://eprocure.gov.in (Central
Public Procurement Portal of India) for all tenders issued
by government / semi government departments.
 Openly Invited Tenders
• It allows any interested contractors to tender. Therefore it gives
opportunity for an unknown contractor to compete for the work.
• The tender list can be long as too many contractors tendering for
one job.
• Allows the tender list to be made without bias. Client will obtain
the best bargain possible. No favoritism in selecting contractors.
• Uneconomic use of resource.
• Ensures good competition, not obliged to accept any offers.
• Public accountability may be questioned, if the lowest offer is not
accepted.
• Traditional method of tendering, familiar to all sectors of the
engineering and construction industry.
• Does not attract reputable and established contractors unless they
are forced to, due to lack of work.
 Openly Invited Tenders
• Advantages
– Better competition.
– Better cost.
– Less corruption.
• Disadvantages
– Unknown participants, cannot be sure that they will complete the
job.
– Participants may not be serious.
– Procedure for not accepting L- 1 bidder being non serious becomes
difficult.
• Not recommended where security concerns are high.
• To prevent the disadvantages, a procedure for
prequalification is generally introduced, or tender issued to
pre-registered contractors.
 Pre - Qualified Tenders
• A method of Competitive, Open yet Restricted Tendering.
• In this procedure, contractors are invited by public
advertisement to apply for pre-qualification as tenderers.
• After analysis and evaluation of the applications, a
comparatively short list is prepared of suitably qualified
tenderers who will be invited to submit commercial bids.
• Generally used as it is the best method for common civil
engineering works.
• Eliminates non serious contractors. Only eligible and
competent contractors remain in the bid.
 Pre - Qualified Tenders
• Advantages.
– All checks for quality, experience, financial state etc
are used for filtering non serious contractors.
– Contractors remaining are all capable of completing
the work in time and satisfactorily.
• Disadvantages.
– Involves an additional screening process.
– Cost of tender could be higher.
– Minimum criteria achieved and experienced
contractors qualify. Quality may yet be affected.
 Pre – Registered Tenders
• A method of competitive, open yet restricted
tendering.
• In this procedure, contractors are invited, usually
by public advertisement, to apply for registration
as tenderers. (Open tendering)
• An alternative to this is not to publish an
advertisement, but instead to send a written
invitation to known and reputable contractors to
register, or ask only pre-registered contractors to
apply (Restricted tendering).
• Tender issued like an open tender but only pre-
registered tenderers can apply, or tenderers need to
complete their registration before acceptance.
 Pre – Registered Tenders
• Advantages.
– Security concerns taken care of.
– Uninterested tenderers are kept at bay.
– Check can be kept on tenderers that they do not
overstretch themselves and complete their work in time.
– Contractors not maintaining quality can be blacklisted.
• Disadvantages.
– Pre-registration required, which takes time hence certain
good tenderers may not be able to apply.
– Weeding out of unsuitable contractors may not be fully
possible.
 Selected / Nominated Tenders
• A method of Competitive yet Restricted
Tendering.
• In this procedure, names of contractors are
picked from a list of contractors available.
• Tenders are issued to only these contractors.
• No others can participate in the tender.
• Generally used for urgent works or high security
related works.
• Tendering process made simple.
 Nominated Tenders
• Advantages.
– Contractors selected are all capable of completing the
work in time and satisfactorily.
– No security concerns as contractors have security
clearances.
– Costs and time of tendering less.
• Disadvantages.
– Cost of tender could be higher.
– Ring tendering chances.
– Some good and capable contractors may be left out as
their capability not known.
– Possibility of bias.
 Negotiated Tender
• Under this, the buyer invites a contractor of
his choice to submit prices for a project.
• Usually this is for specialized work or when
particular equipment is needed as an
extension of existing works, or for further work
following a previous contract.
• Negotiated tendering is extensively used in the
engineering and construction industry.
• Generally not used in government sector.
 Negotiation Process
1. Identification by the employer of a suitable contractor to
negotiate.
2. The contractor can be selected either from the employer’s
own list or on the advice of a professional team.
3. The contractor is apprised of the scope of the work.
4. The selected contractor is issued with details such as the
scope of work involved, relevant drawings, design and /or
information to enable him to appreciate the extents of
obligations and the employer’s actual needs.
5. Some employers prepare and issue to the contractor proper
tender documents inclusive of a nominated bills of quantities
to assist contractor in pricing the works for the forthcoming
negotiations.
 Negotiated Contracts : When?
• Where the employer has a long term business relationship with the
contractor.
• In situations where the parties are in a relationships of holding and
subsidiary companies.
• Where the contractor is involved in the financing of the project.
• In situations where the employer finds it advantages to employ the
same contractor to continue an initial or existing contract.
• Where there is a pressing need to have a very early start of work on
the site and to complete the works on a fast tract basis.
• In special circumstances e.g. Security reasons, emergencies etc where
it is expedient to secure the services of a particular contractor only.
• Where there is only a single contractor who is the only one available
or with either the special skill or resources to carry out the particular
works.
• The employer’s resources are either limited or constrained thereby
making the use of the other tendering impractical.
 Negotiated Tender
• Negotiating with a single supplier may be appropriate
for highly specialist contracts (where there may be a
limited number of potential suppliers), or for extending
the scope of an existing contract.
• It can give the client the confidence of working with a
supplier they already know, can reduce the duration
and costs of tendering and can allow early start of
construction.
• Unless the structure of the negotiation is clearly set
out there is the potential for an adversarial
atmosphere to develop, even before the contract has
been awarded.
• Carrying out negotiations in the absence of
competition so that both parties feel the outcome is
fair, can be complex and time consuming.
• Disadvantages
• Only reputable contractors are invited for
negotiation.
• The cost of work is likely to be higher than
competitive tender.
• Reduces the availability of work for other
contractors.
• Advantages
• The Contractor can contribute his expertise during
design stage.
• Early Commencement of work on site. It shortens
the period involved in appointing the contractor.
 Bid Systems
• Single Bid System.
– Only one bid which is essentially a commercial /
financial bid.
– The envelopes are opened in public at the date and
time advised in the bidding document.
– The bids are evaluated, and following approval by
the evaluation team, the contract is awarded to the
bidder whose bid has been determined to be the
lowest evaluated substantially responsive BID.
 Bid Systems
• Two Bid System.
– Two bids in two sealed envelopes. A technical bid
and a commercial bid.
– Technical Bid. It is a qualification bid. Initially only
this bid is opened. The price proposals remain
sealed. All terms and conditions set out in the bid
should be satisfied. The list of contractors qualifying
the bid is declassified and only their commercial /
financial bid opened.
– Commercial Bid. Consists of the financial bid. Bids of
firms qualifying in the technical bid only opened.
Comparative statement made and L -1 bid accepted.
 Technical Bid
Qualification information and supporting documents as specified
in bidding document such as
• List and cost of works executed
• List and cost of being executed
• List of Machinery held
• List of qualified and Key personal
• Bank certificate / Financial soundness certificate
• Undertaking, etc
• Earnest money as mentioned in NIT (Package wise)
• Acceptance/ Non acceptance of Dispute review expert as
proposed in clause (as indicate in appendix)
• Undertaking to the effect that bid shall remain valid as
specified in clause
 Technical Bid
CONTAINS
• Bid particulars
• Bid letter
• Technical details of the goods/services offered
• Statement of deviations from schedule of
requirements
• Statement of deviations from tender terms &
conditions
• Maintenance infrastructure facilities.
 Financial Bid
• Rates quoted by the contractor in the tender.
– Lump Sum.
– Rates for each item of BOQ.
• L – 1 is determined as per the lowest quote in
the lump sum or lowest total of BOQ quantities
and quoted cost.
• A Comparative statement is made and L – 1
selected.
• Bid is quoted in the form given by the tenderer.
 Financial Bid
CONTAINS
• Bid particular
• Bid letter
• Statement of commercial deviations
• Summary of cost of service offered
• Details of cost of service offered
• Technical services charges
• Other charges
• Accessories