Tenders- Session 9

Tenders: Tendering is the process of making an offer, bid or proposal, or

expressing interest in response to an invitation or request for tender. Organisations
will seek other businesses to respond to a particular need, such as the supply of
goods and services, and will select an offer or tender that meets their needs and
provides the best value for money.
Generic Financial Rules 2005: Provides the contents that should be in the
bidding, Technical details, Bid security, terms of reference etc.
Two ways of awarding Tenders based on price:
L1 Bidding Where lowest bidder is given the tender quoted
H1 Bidding Where the highest quoted bidder is awarded the tender
The two types of Tender Process are

1. Request for Proposal

2. Proposal to empanelment

Request for Proposal:

The Request for Proposal (RFP) is a two envelope

procurement method, where the firms submit the proposal before a set deadline.
The RFP could be 2 stage or 3 stage process.
3 stage Tender:
Technical Bid (Preliminary Documents), Commercial Bid (Resources and reserves) a
and Demand Draft and EMD are consolidated, which would be sent in individual
envelope.
Stage 1 - Upon receiving the submitted proposal, opening of the RFP (bids)
in the presence of bidders.
Stage 2 Technical evaluation would be done based on the submitted

bids, rank the bidders based on their technical documents

Stage 3: Based on the commercial bid documents rank the bidders in

front of all the bidders, a formal sign off is got from the bidders to
ensure that the bid has happened in a transparent manner and tender
is awarded to the bidder either based on L1 or H1 methodology.
In the two stage process three envelops are used in the Tendering
1. Technical bid

2. Commercial Bid (Resources and recovers)

3. Demand Draft with the containing EMD (Earnest Money Deposit)
Where demand draft contains the Application Money and EMD. For
unsuccessful bids the EMD would be refundable, for successful bids the
amount would be deducted from bank guarantee.
Two Stage Tender: The first-stage competition is typically based on deliverables
including a construction technical evaluation wrt to overheads, profits, an
preliminary prices. Second stage would involve the negotiation between
organization and its bidders which is based on the L1 or H1 methodology of bidding.
Question from Babu Venkatesh
How is transparency maintained in todays e-auction and reverse auction?
Ans. In such cases the technical specifications are shared transparently and only
the commercial bid is submitted through the respective bidders login ids which
would be open only for a prescribed time interval. All the e-auctions work based on
the reverse auction, where the organizations sets a commercial price and the bidder
who quotes the least price wins the tender where the entire process is transparent.
On contrary to this process, Ebay uses the H1 method of e-auction bidding.
Question from Prof. Nithyananda
What if the company is fine with the L1 price and not the company which quoted
the L1 price?
Ans. For govt tenders based technical reasons why L1 should be awarded the
tender, with proper approval. Based on technical parameters for rejecting L1, L2 or
L3 are approached and negotiated for the same price of L1. Also L2 and L3 can
bargain with L1. If L3 or L2 doesnt want to equal the price quoted by L1, retendering could be initiated.
Question from Arul Mrugan
Where are the penalty clauses covered in the tender process?
Ans. It could be covered in the preliminary technical documents.

Proposal for empanelment:

This type of tender could be done when, an

organization for sure know that there is a potential chances for projects coming to
them eg: construction of flats. Where a technical scrutiny is done and a
empanelment letter is given to the prospective bidders. When the prospective job
becomes reality the empanelled members are sent a tender notice. Financial bid
alone is circulated from the by the empanelled bidders as their technical proeffiency
is already scrutinized. Where one bid is sent by empanelled bidder based on the L1

bidding. Empanelled members could be block listed any time in between the
bidding process.

Swiss Challenge:

Based on a conceptualized project, a proposal is submitted

to the govt by a company. The received an unsolicited bid for a public project (such
as a port, road or railway) or services to be provided to government, to publish the
bid and invite third parties to match or exceed it.

Considerations:

a conceptualized project, a proposal is submitted to the govt

by a company. The received an unsolicited . In a bilateral contractan agreement
by which both parties exchange mutual promiseseach promise is regarded as
sufficient consideration for the other. In a unilateral contract, an agreement by
which one party makes a promise in exchange for the other's performance, the
performance is consideration for the promise, while the promise is consideration for
the performance. Where there is no consideration, there is no contract.
Considerations could be a responsibility, benefit and forbearance.