Tendering, Bid Evaluation & Award Process

Knowledge sharing by : Prateek Kashyap(With co-participation of Vipul Singhal)

We need to implement; BUT HOW????,That’s a Project !!!!!

What is a Project?

Projects is a temporary rather than permanent social systems or work systems

 that are constituted by teams within or across organizations to accomplish

particular tasks under time constraints.OR

A Project is a temporary endeavor undertaken to accomplish a unique product

or service

OR

In simple words it’s a collection of activities which needs to be performed in

certain defined constraints by a team to realize the need.

Attributes of a Project

Unique purpose

Temporary

Requires resources

Should have a primary sponsor and/or customer

Involve uncertainty

Steps in a Project

Step 1 : Realization of need

Step 2 : Planning for its fulfillment

Step 3 : Decision to produce or Procure

Step 4 : Procurement

Step 5 : Execution / Commissioning

Step 6 : Verify fulfillment of parameters

Step 7 : Handover for Operations

Who are the Stakeholders of Project?Stakeholders are people or entities who have a say in implementation of the

project and they get affected w.r.t. Project’s success or failure.

They are : Employer - Those who are implementing

Contractor - Those who are to supply, construct/ erect &

commission the project equipment or provide

respective services

Consultant - or Engineers who specify, quantify, select and

supervise the supply, construction/erection,

commissioning & Handover of Project for

Operations

Financial Institute - Those who are lending money for project

What is Procurement ? Procurement is the acquisition of goods, services or works from an outside

external source. It is favorable that the goods, services or works are

appropriate and that they are procured at the best possible cost to meet the

needs of the purchaser in terms of quality and quantity, time, and location.

What is the Requirement ? May be for Equipment / Machinery

May be for Technology / Consultancy

May be for Execution / Services / or for Safety / Quality

What are the Methods for Procurement ?

• Agreement

• Purchase order

• Rate contract

• Auction

• Tender

• Acquisition

What is a Tender ?

A written invitation sent to potential suppliers of a good or service to inform

them about the information required for the buyer to choose among them.

Its Objective • To Ensure Best Fit Supplier is selected to Supply Goods/ Services to

customer which offers best value of money

• Selection process should be business ethics driven- Fair Practice

• More options

• Equal opportunity

Routes to be followed for Tendering

Depends primarily on the Statutory Norms or the Financial Institutes .

• ICB : International Competitive Bidding

• LICB : Limited International Competitive Bidding

• NCB : National Competitive Bidding

The Tendering Process

Step 1 : NIT – Notice Inviting Tender (Advertisement, Post , Email.. )

Step 2 : EOI- Expression of Interest by respective Bidders

Step 3 : Tender document Floating/ Selling

Step 4 : Pre Bid Meeting

Step 5 : Bid Submission- In Single Phase or Two Phases

Step 6 : Bid Opening – In Single Phase or Two Phases

Step 7 : Bid Evaluation

Step 8 : Post Bid Meeting

Step 9 : Report Formation

Step 10 : Award of Contract

Contents of NIT (Notice Inviting Tender)• Brief Project Particulars

• Brief Requirement of Tender

• Eligibility Criteria – Technical & Financial

• Duration & Place of sale of tender document

• Price of tender document

• Contact Information

• Probable amount of Contract (Primarily in Govt. Tenders)

• Earnest Money amount

• Work completion period

• Bid submission period

Sample NIT- Pvt. NIT-Govt.

Advertising the NIT

Depending on the the need of the Route of tendering, the NIT needs

to be advertised or circulated through & to :

• All Embassies ( ICB/ LICB route to be followed)

• Major newspapers (ICB/ LICB/ NCB route to be followed)

• Web portals (ICB/ LICB/ NCB route to be followed)

The NIT may be brief from publishing point of view as an advertisement. The detailed NIT in this case is given upon receiving EOI (Expression of Interest) from the prospective Bidder

EOI - Expression of interest

Interested Bidders shall show their Interest in executing the

Tender/ submitting the Bid and ask for the Complete Tender

documents

Followed by purchase of the tender documents

Tendering type based on mode of submission

Manual tendering- Paper type submission

E Tendering- E-submission (E Bidding)

Contents of Tender Document

Section I : NIT/ IFB (Invitation For Bids)

Section II : ITB (Instruction To Bidders)

Section III : GCC (General Conditions of Contract)

Section IV : SCC (Special Conditions of Contract)

Section V : SOR (Schedule of Requirement)

Section VI : Technical Specification

Section VII : Various Bid Forms

Constituents of Bid Forms in Tender document

• Bid Security Form,

• Contract Form,

• Performance Security Form,

• Financial Capability Form,

• Technical Capability Form,

• Manufacturer Authorization Form,

• Advance bank Guarantee Form,

• Completion certificate Form,

• Deviation Statement Form,

• Places of Tests & Inspection Form….

The Pre Bid Meeting

Subsequent to the purchase of Tender Document, the prospective

Bidders, Employer and Consultants meet for discussions with following

objectives :

• Provide clarification to the Bidders- Technical or Commercial

• Communicate any additional information in Project

• Do necessary revision in the tender documents as per industry

feedback

• Ensure minimum deviations

• Critical points to explained and discussed

The Minutes of Pre Bid Meeting are recorded and it may be followed by an Amendment or Addendum to the Tender documents

The Bid Submission/ Tender Submission

Subsequent to the Pre Bid Meeting, the Bids are prepared and submitted in

the prescribed time and form, duly sealed.

The Bid submission could be of following forms

Two Stage Bidding : First Techno commercial part & then Price

part

Single stage Bidding : Comprehensive Bid is submitted

The Bid Submission/ Tender Submission

The Bid Opening / Tender Opening

Tender Board ( consisting of representative of Employer -Chairman/

Board Member/ CEO/ CE; Consultant, Financial Institute) meets on the

nominated day and time to open these Sealed bids ( Generally few

hours after last time of Bid submission date). Late Bids are not

supposed to be entertained. Usually Following steps are followed:

Step 1 : Introduction of the Participants and announcement of the

Bidders. Followed by Attendance marking.

Step 2 : Declaration of Sufficiency of the Bid Bond

Step 3 : Declaration of Guaranteed Technical Particulars

Step 4 : Declaration of the Bid Price if it’s a Single Stage Bid

The Bid Opening / Tender Opening

The Bid Evaluation

Generally the bid evaluation process involves a team of experts or panels

which is lead at the front by a single person who is responsible for

interdepartmental/interdisciplinary coordination as well as coordination with the

stake holders to and Bidders . He may be known as Project Coordinator or

Project Manager. His objectives are:

• The Bid is thoroughly evaluated by the respective Technical, Legal,

Commercial &Financial experts

• Proper flow of communication to & from bidders (queries & replies)

• All aspects of bids are evaluated

• Every Bidder gets a fair chance of winning the contract

Assessment Financial assesment

• Technical assesment• Capacity assesment

The Bid Evaluation

The Evaluation of the bid has following parts:

• Technical Evaluation

• Commercial Evaluation

• Capacity Evaluation

The Bid Evaluation- Technical• The equipment /system & manufacturer being offered by the bidder is to be

evaluated for its conformance with the tender technical specification

• The Guaranteed Technical particulars are to meet the minimum Tender

requirement.

• Any alternative technology or material grade offered by the bidder needs to be

verified.

• Any price implication on the project w.r.t. technical parameters to be verified

and respective loading on the price to be proposed.

• The feedback of working of the equipment supplied by the bidders in other

projects to be evaluated

• The factory load of the bidder or its major supplier should be evaluated

The Bid Evaluation- Technical (-Score method)

The Bid Evaluation- (-Weighted Score method)

The Bid Evaluation- Commercial• The Bid Forms are duly filled and signed

• The declared Deviations on the Commercial part are to be evaluated

• All costs are properly covered in the offered prices

• Bid price is in specified currency or the listed conversion rate at the time of

price bid opening are to be considered.

• Any price variation/escalation formulae are correct and is justified

• Details of any extra costs ( such as Delivery cost , shipping cost, custom

charges, insurance, documentation , testing & inspection) are identified

• Cost of Spares if mentioned extra is identified

• Any other indirect commercial deviations are identified

The Bid Evaluation- Capacity• The Bidder has sound financial condition

• The Bidder has sufficient funds to procure raw material and process so that

positive cash flow is maintained up to delivery of equipment

• The Bidder is not under litigation or any act resulting in bank corruptly

• The Bidder’s financial has sufficient immunity from market economy trend

• Will there be any cost resulting from loss of economy of scale

• If offer is for Services , then check should be done if resultant staff savings or

reduction in support services fully accounted for

• Has the cost of any long term agreement been included ?

• In case of Foreign Bidder, geo-Political scenario to be evaluated.

Post Bid Meeting• During Bid Evaluation , Bid Evaluation committee witness that submitted Bid

has several variation with the Technical Specification of the Tender.

• It is therefore difficult for the Committee to Compare the Bids .

• A Post Bid Meeting is organized with separate Bidders individually to bring

them to a common Platform and negotiate on the Technical Specs wherever

appropriate

• Once the Technical part is freezed out , Bidders are asked to again submit

their Commercial Bid ( after taking into consideration the cost of technical

changes) .

Post Bid Meeting

Evaluation Report• Before Release of Order/ award of contract , an evaluation report is being

generated for the purpose of Office records or for future reference.

• This report contains basic details such as

Description of Contract

Type of Tender

Closing date of Tender

Details of Tender Received

Technical Compliance of tenders

Analysis of Lowest 3 tenders

Performance records of Lowest 3 tenders

Recommendation of Assessment Panel

Sample

Evaluation Simple formatEvaluation- TechnicalEvaluation Commercial

Award Process

• Based on Evaluation report & recommendation of Assessment Panel a “ Best Fit Bidder”

or successful is declared.

• A Letter of Award is Issued to the Successful Bidder.

• The Bidder is asked to submit a Contract Performance Guarantee which could be in

form of a Bank Guarantee, Demand Draft, Cash or a Fixed Deposit Receipt

• A contract between Bidder & Employer is drafted as per International Contract Laws.

• Contractual Obligations & Rights are being drafted / incorporated in the contract

• Technical Obligations are clearly stated

• Quality Obligations are clearly stated

• Completion Schedule is clearly stated

• Payment schedules are clearly stated

• The contract is signed and moved for implementation

Contract document’s Broad features

• Work of tender/contract is mentioned

• Date of signing is mentioned

• Parties are mentioned

• Scope of the contractor is mentioned

• Contract price is mentioned

• Documents of reference and their order of precedence is mentioned

• Time schedule is mentioned

• Payment terms is mentioned

• Other conditions of contract- technical & commercial are referred.

• Duly signed/stamped by the authorized representatives in presence of witness

Sample Contract 1 & 2

Thanks