June 2019

Lecture 6
Engineering Management
Bidding Procedures I

1.0 INVITATION TO TENDER

When all the preliminaries are completed and the owner has decided to proceed with the work, tenders are
invited. Legally this is an attempt to check if there would be interested contractors to carry out the work
within the estimated limit of time and finance. The invitation to Tender is not binding to the owner to
proceed with the work and does not cause any liability for any expenses to which contractors would spend in
preparing and submitting their construction bids.

Owners should advertise the availability and distribution of bidding documents as far in advance as possible,
but no later than 30 days prior to bid document issue. An advertisement should contain a short description of
the project, including bid date, time, approximate contract amount, approximate size, project location,
licensing requirements, plus bid and performance and payment bond requirements. It also should state the
date of document availability, location of documents, and deposit and refund information.

2.0 REQUIREMENTS TOBIDDERS

The following a (Sample)1 requirements to bidders:

An Employer invites sealed bids from eligible Contractors who meet the following criteria:

a. Copies of certificates of registration, and principal place of business;

b. Must have complied with tax requirements
c. Indicate the total monetary value of construction work performed for each of the last three years;
d. Has experience in works of a similar nature and size for each of the last three years, and clients who
shall be contacted for further information on these contracts;
e. Indicate major items of construction equipment owned by bidder;
f. Indicate major items contractor intends to lease for this assignment;
g. Have qualified and experienced key site management and technical personnel proposed for the
Contract; indicating their technical capability and must indicate the same including CV’s and copy
certificates
h. Must be an authorized Contractor of at least class D. The certificate should be issued by the relevant
government Ministry and copy of the registration certificate must be submitted with this bid.
i. Attach reports on the financial standing of the Bidder, such as profit and loss, balance sheet,
statements and auditor’s reports for the last two years or a letter from the bank stating available
credit line (of not less than twenty million) or a certificate of deposits etc.
j. Willing to give authority to for the employer to seek references from the Bidders bankers and
references.
k. Bidder shall not be under a declaration of ineligibility for corrupt and fraudulent practices.
l. Bidder who have worked for the company before shall demonstrate they have completed all the
previous projects and that none of the contracts has been terminated or in the process of termination
for non-performance.

Interested eligible candidates may obtain further information from and inspect the Bid documents at the
Procurement Office, during normal working hours (08:30 – 15:30 local time on Mondays to Fridays except
during lunch time from 13:00 to 14:00 hours and public holidays.).

1Extracted from a construction of water kiosks and extension of water pipelines bid
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A complete set of Bid documents may be obtained by interested candidates upon payment of non-refundable
fee.

Completed Bid documents are to be enclosed in plain sealed envelopes marked with Bid reference number and
be deposited in the Tender Box at the Employer’s office by a set date.

Prices quoted should be inclusive of all taxes; and must be in Kenya Shillings. They shall remain valid for a
period of ninety (90) days from the closing date of the Bid.

Bids will be opened immediately thereafter in the presence of the Candidates or their representatives who
choose to attend

3.0 INSTRUCTIONS TO BIDDERS

Instructions to bidders should include:
 General Description of the project
General description of the project includes the location and other pertinent project information.
 Scope of Bids,
Scope of bids whether bidders are required to bid for the entire contract or are permitted to bid
for parts of it (alternative contract options).
 Bid Submission Procedures and Requirements,
Include:
 The language to be adopted in the preparation of the bids,
 The manner of submission, the number of copies of bid proposals to be submitted aside
from the original, pertinent addresses such as where the bids are to be submitted,
 Deadline for the submission of bids,
 Permissible mode of transmission of bid proposals.
 The exact place, date and time of opening of bids.
 Terms of Delivery
Terms of delivery which shall refer to the basis/currencies and applicable exchange rates on
which the bid prices are to be quoted and on what terms the contract is to be awarded.
 Bid and Bid Security Validity Period,
Bid and Bid Security Validity period which shall consider the time that will be required to
examine and evaluate all bids, select the successful bidder, obtain the necessary approvals,
including the time required to notify the successful bidder of the award of contract in his favour.
 Method and Criteria for Bid Evaluation
Method and criteria for bid evaluation that will be adopted.
 Pre-bid Conference schedule
Pre-bid conference schedule will be provided where applicable.
3.1 Cost of Bidding
The Bidder shall bear all costs associated with the preparation and submission of his Bid and the Employer
shall in no case be responsible or liable for those costs, regardless of the conduct or outcome of the biding.
3.2 Site Visit
The Bidder MUST visit and examine the site and its surroundings and obtain for himself on his own
responsibility, all information that may be necessary for preparing the Bid and entering into contract. The
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costs of visiting the site shall be the Bidder’s own responsibility. A site visit confirmation form shall form part
of this bid document.

3.3 Bid Documents

The Bid documents shall comprise:
a) Form of Invitation for Tenders
b) General Conditions of contract-part I
c) Specifications
d) Bills of Quantities
e) Drawings
f) Instructions to Bidders
g) Form of Bid
h) Form of Bid surety
i) Form of performance Security
j) Letter of acceptance

a. General Conditions
The Conditions of Contract set out the core terms of the contract between the parties. In doing
so, the Conditions of Contract set forth the rights, obligations and responsibilities of the parties
arising in connection with the design and construction of the works. The Conditions of Contract
also prescribe procedures for the management of the project.

This contract document will define the obligations and rights on how to execute the project.

b. Specifications
Specifications add intelligence to the construction drawings; specify common standards,
deviations accepted, materials accepted and the required testing for all materials. Usually,
specifications are composed by referencing construction standards and codes. The specification
sets out the technical requirements of the works, and how those works are to be executed.

Specifications may be classified as: General Specifications or Detailed Specifications

c. Bill of Quantities
Bill of Quantities is formed by the list of diverse trades, and materials included that form part of
the construction. Sometimes this document is not required by the contracting officer.

d. Drawings
All set of drawings that form part of the job to be performed. These drawings are usually the
latest drawings and must be received by the contractor prior to the date of commencement. It
must include all drawings from consultants, and will constitute the entire project being
contracted.

e. Letter of Acceptance
The Letter of Acceptance as the “letter of formal acceptance, signed by the Employer, of the
Letter of Tender, including any annexed memoranda comprising agreements between and
signed by both Parties”.

3.4 Clarification of Bid Documents

 A prospective Bidder requiring any clarification of the Bid documents may notify the Employer in
writing or by e-mail, cable or facsimile at the Employer’s mailing address indicated in the
Invitation to Bid.
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 The Employer shall respond in writing to any request for clarification which he receives earlier
than seven (7) days prior to the deadline for the submission of Bids.
 Written copies of the Employer’s response (including the query but without identifying the
source of the inquiry) shall be sent to all prospective Bidders who have purchased the Bid
documents. Clarifications shall be done within three (3) days of receipt.

3.5 Amendment of Bid Documents

 At any time prior to the deadline for submission of Bids the Employer may, for any reason,
whether at his own initiative or in response to a clarification requested by a prospective Bidder,
modify the Bid documents by issuing Addenda.
 Any Addendum shall be notified in writing or by cable, email or facsimile to all prospective
Bidders who have purchased the Bid documents and shall be binding upon them.
 In order to allow prospective Bidders reasonable time in which to take the Addendum into
account in preparing their Bids, the employer may, at his discretion, extend the deadline for the
submission of Bids.

3.6 Bid Prices

 All the insertions made by the Bidder shall be made in INK.
 The relevant space in the form of Bid and Bills of quantities shall be completed accordingly)
without interlineations or erasures except those necessary to correct errors made by the Bidder
in which case the erasures and interlineations shall be initialed by the person or persons signing
the Bid.
 A price or rate shall be inserted by the Bidder for every item in the Bills of Quantities whether
the quantities are stated or not.
 Items against which no rated or price is entered by the Bidder shall not be paid for by the
employer when executed and shall be deemed covered by the rates for other items and prices in
the Bills of Quantities.
 Each price or unit rate inserted in the Bills of Quantities shall be realistic estimate for completing
the activity or activities described under that particular item and Bidders are advised against
inserting prices or rates against any item contrary to this instruction.
 Unless otherwise specified the Bidder must enter the amounts representing 10% of the sub-total
of the summary of the Bills of Quantities for contingencies and variation of Prices (V.O.P)
payments in the summary sheet and add them to the sub-total to arrive at the Bid amount.

3.7 Bid Validity

 The Bid shall remain valid and open for acceptance for a period of ninety (90) days from the
specified date of Bid opening or from the extended date of Bid opening

3.8 Bid Surety

 The Bidder shall furnish as part of the Bid, a Bid Surety in the amount Ksh. …………… only and
valid for 30 days beyond the validity of the Bid i.e. 120 days from date of Bid submission.
 Any Bid not accompanied by an acceptable Bid Surety shall be rejected by the Employer as non-
responsive.
 The Bid Sureties of unsuccessful Bidders shall be returned as promptly as possible as but not
later than twenty eight-(28) days after concluding the contract execution and after a
performance Security has been furnished by the successful Bidder.
 The Bid Surety of the successful Bidder shall be returned upon the Bidder executing the Contract
and furnishing the required Performance Security.
 The Bid Surety may be forfeited:
a) If a Bidder withdraws his Bid during the period of Bid validity:

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or
b) In the case of a successful Bidder, if he fails
(i) To sign the Agreement,
or
(ii) To furnish the necessary Performance Security
c) If a bidder does not accept the correction of his Bid price pursuant to requirements of
this bid.

3.9 Pre-Bid Meeting

There shall be no pre-Bid meeting. Any clarification may be channeled to the Managing Director or his
representative. Such clarification must be in accordance with the relevant clause.

3.10 Submission of Bids

Each bidder shall submit his bid as under:
a. ORIGINAL and each copy of the Bid shall be separately sealed and put in separate envelopes and
marked as such.
b. The envelopes containing the ORIGINAL and copies will be put in one sealed envelope and
addressed

3.11 Deadline for Submission of Bid

 Bids must be received by the Employer at the address specified in invitation to bid and on the
date and time specified in the letter of Invitation.
 Bids delivered by hand must be placed in the ‘’Bidder Box’’ provided in the office of the
employer office.
 Proof of posting shall not be accepted as proof of delivery and any Bid delivered after the above
stipulated time, from whatever cause arising shall not be considered.
 The Employer may, at his discretion, extend the deadline for the submission of Bids through the
issue of an Addendum in accordance with relevant clause, in which case all rights and obligations
of the Employer and the Bidders previously subject to the original deadline shall thereafter be
subject to the new deadline as extended.
 Any Bid received by the Employer after the prescribed deadline for submission of Bid shall be
returned unopened to the Bidder.

3.12 Modification and Withdrawal of Bids

 The Bidder may modify or withdraw his Bid after Bid submission, provided that written notice of
the modification or withdrawal is received by the Employer prior to prescribed deadline for
submission of Bids.
 No Bid may be modified subsequent to the deadline for submission of Bids.
 No Bid may be withdrawn in the interval between the deadline for submission of Bids and the
period of Bid validity specified on the Bid form. Withdrawal of a Bid during this interval shall
result in the forfeiture of the Bid surety.

3.13 Bid Opening

 The Employer shall open the Bids in the presence of the Bidder’s representatives who choose to
attend at the time and location indicated in the Letter of Invitation to Bid.
 The Bidder’s representatives who are present shall sign a register evidencing their attendance.
 Bids, for which an acceptable notice of withdrawal has been submitted, shall not be opened.
 At the Bid opening, the Employer shall announce the Bidders names, total Bid price, Bid price
modifications and Bid withdrawals, if any, the presence of the requisite Bid surety and such
other details as the Employer, at his discretion, may consider appropriate.
 No Bid shall be rejected at the Bid opening except for late Bids.
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 The Employer shall prepare minutes of the Bid opening including the information disclosed to
those present.
 Bids not opened and read out at Bid opening shall not be considered further for evaluation,
irrespective of the circumstances.
 After the public opening of Bids, information relating to the examination, clarification,
evaluation and comparisons of Bids and recommendations concerning the award of Contract
shall not be disclosed to Bidders or other persons not officially concerned with such process
unless the award of Contract is announced.
4.0 EVALUATION OF BIDS

4.1 Evaluation Duration

Evaluation of bids shall be completed no later than thirty (30) calendar days from the date of the opening of
bids.

4.2 Stages of Evaluation

 Preliminary Evaluation
 Detailed Evaluation
 Technical Evaluation
 Financial Evaluation
 Awards

4.2.1 Preliminary Examination to include

Only bids that are determined to contain all the bid requirements in the sealed envelope/s shall be rated
"passed" and shall be considered for evaluation and comparison.

 The Bid is complete and does not deviate from the scope,
 Any computational errors have been made,
 Required sureties have been furnished,
 The documents have been properly signed,
 The Bid is valid till required period,
 The Bid prices are firm during currency of contract if it is a fixed price bid,
 Completion period offered is within specified limits,
 The Bidder/Manufacturer is eligible to bid and possesses the requisite experience,
 Is the bid accompanied by the required securities i.e. the amount is adequate as Standard
Procedure for Evaluation of Bids for Procurement of Works?

4.2.2 Detailed Evaluation

The bid evaluation shall be based on a detailed analysis of the following:
a. Completeness of the bid: bids not offering all of the required items shall be considered non-
responsive and, thus, automatically disqualified
b. The bid security must conform to the requirements of the Instructions to Bidders, as to type,
amount, form and wording, and validity period
c. The bid price subject to a price equalization analysis calculating arithmetical errors and other
minor deviations
d. Identification of minor/major deviations and terms and conditions as described in the
Instructions to Bidders

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Bids that contain major deviations from the requirements in the instruction to bidders shall be
considered invalid.

e. Corrections for errors, discounts, and other modifications: corrections for arithmetical or
computational errors, as well as for discrepancies between total bid prices and extended unit bid
prices, between stated total prices and actual summations, between prices in figures and in
words, and other errors/discrepancies, shall use the methodology described in the Instructions
to Bidders. Discounts and other modifications in the bid amounts shall be reflected in the
evaluation of bids.
f. Modifications and Discounts:
Bidders are allowed to submit, prior to bid opening, modifications to their original bid. The
impact of modifications should be fully reflected in the examination and evaluation of the bids.
These modifications may include either increases or discounts to the bid amounts that reflect
last-minute business decisions.

4.2.3 Technical Evaluation

It will be examined in detail whether the Works offered by the bidder complies with the Technical Provisions
of the Bidding Documents. For this purpose, the bidder’s data submitted with the bid will be compared with
technical information submitted with the bid regarding the Scope of Work will also be reviewed.

4.2.4 Clarification of Bids

To assist in the examination, evaluation, and comparison of the bids, and qualification of the Bidders, the
Employer may, at its discretion, ask any Bidder for a clarification of its bid, given a reasonable time for a
response.

4.2.5 Evaluation and Comparison of Bids

 Information relating to the evaluation of bids and recommendation of contract award shall not
be disclosed to Bidders or any other persons not officially concerned with the bidding process
until information on Contract award is communicated to all Bidders
 Any attempt by a Bidder to influence the Employer in the evaluation of the bids or Contract
award decisions may result in the rejection of its bid.

4.2.6 Deviations, Reservations, and Omissions

 During the evaluation of bids, the following definitions apply:
(a) “Deviation” is a departure from the requirements specified in the Bidding Documents;
(b) “Reservation” is the setting of limiting conditions or withholding from complete
acceptance of the requirements specified in the Bidding Documents; and
 “Omission” is the failure to submit part or all of the information or documentation required in
the Bidding Documents

4.2.7 Correction of Arithmetical Errors

Provided that the bid is substantially responsive, the Employer shall correct arithmetical errors on the
following basis:

a. If there is a discrepancy between the unit price and the total price that is obtained by
multiplying the unit price and quantity, the unit price shall prevail and the total price shall be
corrected, unless in the opinion of the Employer there is an obvious misplacement of the

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decimal point in the unit price, in which case the total price as quoted shall govern and the unit
price shall be corrected;
b. If there is an error in a total corresponding to the addition or subtraction of subtotals, the
subtotals shall prevail and the total shall be corrected; and
c. If there is a discrepancy between words and figures, the amount in words shall prevail, unless
the amount expressed in words is related to an arithmetic error, in which case the amount in
figures shall prevail subject to (a) and (b) above

Bidders shall be requested to accept correction of arithmetical errors. Failure to accept the correction, shall
result in the rejection of the Bid

4.2.8 Comparison of Bids

The Employer shall compare the evaluated prices of all substantially responsive bids to determine the lowest
evaluated bid.

4.2.9 Employer’s Right to Accept Any Bid, and to Reject Any or All Bids
The Employer reserves the right to accept or reject any bid, and to annul the bidding process and reject all
bids at any time prior to contract award, without thereby incurring any liability to Bidders. In case of
annulment, all bids submitted and specifically, bid securities, shall be promptly returned to the Bidders

4.3 AWARD OF CONTRACT

 Employer shall award the Contract to the Bidder whose Bid is determined to be substantially
responsive to the: Bid documents and who has offered the lowest evaluated Bid price subject to
possessing the capability and resources to effectively carry out the Contract Works.
 The Employer reserves the right to accept or reject any Bid, and to annul the Biding process and
reject all Bids, at any time prior to award of contract, without thereby incurring any liability to
the affected Bidders or any obligation to inform the affected Bidders of the grounds for the
employer’s action.

4.4 Notification of Award

 Prior to the expiration of the period of Bid validity prescribed by the employer, the Employer
shall notify the successful Bidder by cable, telefax or e-mail and confirmed in writing by
registered letter that his Bid has been accepted. This letter (hereinafter and in all contract
documents called ‘’Letter of acceptance’’ shall name the sum (hereinafter and all in all
documents called ‘’the contract Price’’) which the Employer shall pay to the Contractor in
consideration of the execution and completion of the works as prescribed by the Contract.
 Notification of award shall constitute the formation of the contract
 Upon furnishing of a performance security by the successful Bidder, the unsuccessful Bidders
shall promptly be notified that their Bids have been unsuccessful within twenty one (21) days of
receipt of the form of contract Agreement from the Employer, the successful Bidders shall sign
the form and return it to the Employer together with the required Performance Security.

A sample of award of contract letter is given in Appendix I

4.5 Signing of Contract

 Within twenty-eight (28) days of receipt of the Contract Agreement, the successful Bidder shall
sign, date, and return it to the Employer

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4.6 Performance Guarantee

 Within twenty-eight (28) days of the receipt of notification of award from the Employer, the
successful Bidder shall furnish the performance security in accordance with the General
Conditions of Contract.
 Failure of the successful Bidder to submit the Performance Security or sign the Contract shall
constitute sufficient grounds for the annulment of the award and forfeiture of the bid security.
 In that event the Employer may award the Contract to the next lowest evaluated Bidder whose
offer is substantially responsive and is determined by the Employer to be qualified to perform
the Contract satisfactorily.

4.7 Termination for default

The Procuring entity may, without prejudice to any other remedy for breach of Contract, by written notice of
default sent to the Bidder, terminate this Contract in whole or in part
a. if the Bidder fails to deliver any or all of the goods within the periods) specified in the Contract,
or within any extension thereof granted by the Procuring entity
b. if the Bidder fails to perform any other obligation(s) under the Contract
c. if the Bidder, in the judgment of the Procuring entity has engaged in corrupt or fraudulent
practices in competing for or in executing the Contract

In the event the Procuring entity terminates the Contract in whole or in part, it may procure, upon such
terms and in such manner as it deems appropriate, equipment similar to those undelivered, and the Bidder
shall be liable to the Procuring entity for any excess costs for such similar goods.

Either Party may terminate the contract for any reason provided that such termination is communicated to
the other Party by way of a notice and provided that such a notice is given three calendar months from the
date of receipt of the notice to the date of the termination.

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 APPENDIX 1: SAMPLE BID OPENNING CHECK LIST

BID OPENING CHECKLIST

(To be filled-out for each bid as it is read-out)

Contract Reference:
___________________________________________________________
Bid Opening Date: ______________________________ Time: _______________________
Name of Bidder: _____________________________________________________________

a. Is outer envelope of bid sealed?

b. Is Form of Bid completed and signed?
c. Expiration date of bid : ________________________
d. Is documentary authority for signing enclosed?
e. Amount of bid security (as required): _______________________
f. Describe any “Substitution,” “Withdrawal,” or “Modification” submitted.
g. Describe any alternative bid made.
h. Describe any discounts or modifications offered.
i. Additional comments
j. Name of bidder or his representative who attended bid opening.
k. Total bid price:
_________________________________________________________
(If bid is for a package of contracts, the price for each slice should be read out).
Signed by:
____________________
Members of Committee
___________________
Bidders Representatives
_____________________
Convener of Committee

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APPENDIX 2: SAMPLE LETTER OF AWARD

LETTER OF NOTIFICATION OF AWARD

Address of Procuring Entity

_____________________________________
_____________________________________

To:

RE: Tender No……………………………………………………….

Tender Name…………………………………………………………

This is to notify that the contract/s stated below under the above mentioned tender have been awarded to
you.

a. Please acknowledge receipt of this letter of notification signifying your acceptance.

b. The contract/contracts shall be signed by the parties within 30 days of the date of this letter but not
earlier than 14 days from the date of the letter.
c. You may contact the officer(s) whose particulars appear below on the subject matter of this letter of
notification of award.

(FULL PARTICULARS)
SIGNED FOR ACCOUNTING OFFICER

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APPENDIX 3: SAMPLE BID BOND

FORM OF TENDER SECURITY

WHEREAS ………………………………………..(hereinafter called “the Tenderer”) has submitted his tender dated
………………………… for the construction of ……………………………………………………………………… ……………………
(name of Contract)
KNOW ALL PEOPLE by these presents that WE ……………………… having our registered office at
………………(hereinafter called “the Bank”), are bound unto ……………………………(hereinafter called “the
Employer”) in the sum of Kshs.……………………… for which payment well and truly to be made to the said
Employer, the Bank binds itself, its successors and assigns by these presents sealed with the Common Seal of
the said Bank this ……………. Day of ………20…………

THE CONDITIONS of this obligation are:

1. If after tender opening the tenderer withdraws his tender during the period of tender validity
specified in the instructions to tenderers
Or
2. If the tenderer, having been notified of the acceptance of his tender by the Employer during the
period of tender validity:

a. fails or refuses to execute the form of Agreement in accordance with the Instructions to
Tenderers, if required; or
b. fails or refuses to furnish the Performance Security, in accordance with the Instructions to
Tenderers;

We undertake to pay to the Employer up to the above amount upon receipt of his first written demand,
without the Employer having to substantiate his demand, provided that in his demand the Employer will note
that the amount claimed by him is due to him, owing to the occurrence of one or both of the two conditions,
specifying the occurred condition or conditions.

This guarantee will remain in force up to and including thirty (30) days after the period of tender validity, and
any demand in respect thereof should reach the Bank not later than the said date.

___________________________ ______________________________
[date [ [signature of the Bank]
___________________________ ______________________________
[witness] [seal]

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APPENDIX 4: SAMPLE PERFORMANCE BANK GUARANTEE

PERFORMANCE BANK GUARANTEE

To: _________________________(Name of Employer) ___________(Date)

__________________________(Address of Employer)

Dear Sir,

WHEREAS ______________________(hereinafter called “the Contractor”) has undertaken, in pursuance of

Contract No. _____________ dated _________ to execute _______________ (hereinafter called “the
Works”);

AND WHEREAS it has been stipulated by you in the said Contract that the Contractor shall furnish you with a
Bank Guarantee by a recognised bank for the sum specified therein as security for compliance with his
obligations in accordance with the Contract;

AND WHEREAS we have agreed to give the Contractor such a Bank Guarantee:

NOW THEREFORE we hereby affirm that we are the Guarantor and responsible to you, on behalf of the
Contractor, up to a total of Kshs. ________________ (amount of Guarantee in figures) Kenya
Shillings__________________________________________ (amount of Guarantee in words), and we
undertake to pay you, upon your first written demand and without cavil or argument, any sum or sums
within the limits of Kenya Shillings _________________________ (amount of Guarantee in words) as
aforesaid without your needing to prove or to show grounds or reasons for your demand for the sum
specified therein.

We hereby waive the necessity of your demanding the said debt from the Contractor before presenting us
with the demand.

We further agree that no change, addition or other modification of the terms of the Contract or of the Works
to be performed thereunder or of any of the Contract documents which may be made between you and the
Contractor shall in any way release us from any liability under this Guarantee, and we hereby waive notice of
any change, addition, or modification.

This guarantee shall be valid until the date of issue of the Certificate of Completion.

SIGNATURE AND SEAL OF THE GUARANTOR ___________________

Name of Bank ____________________________________________
Address ________________________________________________
Date ______________________________________________________

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