Download - Professional Practice :Tender Scrutiny and Award of Bids

PROFESSIONAL PRACTICE I

RAHUL N.SOMPURA (2905) P a g e | 1

Tender Scrutiny and Award of Bids/Offers

Processing and Evaluation of Bids

For Government & International Competitive Bidding the tenders aredecided in line with Government Guidelines including that of CVC issued from time to time. The following points are kept in view during scrutiny/evaluation of tender offers that are duly opened. The prices of bidders during prequalification stage whose offer is technically suitable and acceptable is only opened. The financial bid of other tenderers whose technical bids are not qualified, are not opened under any circumstances and the Envelopes containing their financial bids are kept unopened in record.

Procedure in Scrutiny of Rates

If on checks there are differences between the rates given by the contractor in words and figures or in amount worked out by him, the following procedure is followed:a) When there is a difference between the rates in figures and in words, the rates which correspond to the amounts worked out by the contractor, is taken as correct.b) When the amount of an item is not worked out by the contractor or it does not correspond with the rates written either in figures or in words, then the rate quoted by the contractor in words istaken as correct.

c) When the rate quoted by the Contractor in figures and in words tallies but the amount is not worked out correctly, the rates quoted by the contractor is taken as correct and not the amount.In the case of percentage Rate Tender, the contractors are required to quote their rates both in amount as well as inthe percentage below/above the rates entered in the Schedule. In such cases in the event of arithmetical error committed in working out the amount by the contractor, the tendered percentage and not the amount should be taken into account.

Absurdly High Rate (AHR) / Absurdly Low

Rate (ALR) / Freak Rate Items:

AHR/ALR Items

The item rates quoted which vary more than 25%as compared to the estimated rates are identified & discussed with the L-1 Bidder, and if the bidder does not agree to reconsider his offer of AHR/ALR Items following negotiations, these items will be kept under serious watch during execution of work. Duringexecution, the Engineer as well as the Nodal Officer may allow AHR ± 5% quantities stipulated in the agreement.

Freak Rate Items

Rates quoted which are more than 100%higher/lower than the estimated rate, are considered as freak rate items and are identified. The Engineer as well as the Nodal officer keeps a strict watch over these AHR/ ALR/ freak rate items during execution of the work for possible deletion/decrease of the quantity of such items.

Technical Evaluation

Efforts are made to bring all the offers at par technically after conducting technical discussions / or seeking clarification/documents etc., through correspondence before opening of the price bids. For this purpose, the pre-qualified parties are asked to withdraw the deviations and submit revised offers if any, after agreeing to the NIT conditions. In cases where parties still insist for technical deviations vis-a-vis NIT conditions which are not in line with the tender documents, offers are evaluated on the basis of loading factors indicated, if any in the tender documents. No loading on technical deviations is permissible in case the loading criteria on such technical deviation are not specified in the tender document. The recommendations of TOC, if any, shall then be approved by competent authority after scrutiny and vetting by Technical Advisory Committee (TAC), which then be intimated accordingly to all the bidders duly giving them an opportunity to submit revised price bids, if any, to promote transparency.

Scrutiny Of Tender For Award OfContracts – A Case Study

Rahul N.Sompura, Student, School Of Building Science & Technology, CEPT University, Ahmedabad



Comparative Statement of Price Bids

After completion of the techno-commercial scrutiny, the price bids are opened and evaluated. The comparative statement indicates the item-wise prices, rebates (if any), taxes, duties, packing and forwarding charges, freight & insurance, etc., as applicable for all the accepted bidders. The factors and the method of their application which have been prescribed in the tender documents are used while working the overall price in the comparative statement. If any additional factor has emerged during technical clarifications meetings, to be adopted for evaluation of the tenders, then in that case an opportunity is given to all the bidders to confirm such an additional factor to be considered for evaluation of tenders.The evaluated prices worked out in the comparative statement for different bidders will be ranked as L1, L2, L3 ..........., L1 being the lowest. The estimated price as per the estimate and its percentage variation from the total quoted price worked out as per comparative statement for each bidder will also be recorded in the comparative statement.

Analysis / Justification of Rates

The rates quoted by the lowest bidder (L-1 bidder) for entire scope of work are compared with the total estimated rates. Further, the item rates quoted by L-1 bidder is also compared with the item wise estimated rates and an attempt is made to negotiate the AHR/high freak rates of items with the L-1 bidder in an effort to bring down the quoted rates of such AHR/freak rate items to the lowest tendered rates for that item in the received offers of the tender compiled in the comparative statement as well as the estimated rates of such item(s).

Acceptance of Tenders at market rates with

allowable variations

It is not enough to accept the lowest tender. The tendered rates should also be reasonable considering the market condition and other factors pertaining to particular works. Variations up to plus 5% in amount over the amount worked out at prevalent market rates may be ignored. In case of greater emergency, variation up to plus10% might be allowed, but in no case, rate higher than 10% should be accepted. The adoption of the following method for assessing the reasonable amount may be followed as per the procedure approved by the Board of Directors, which shall be reviewed by them from time to time and also with due regard to specific nature and factors of difficulties related to work(s) to be awarded. The reasonable rate of the item will be arrived in case of any changes in rates of key materials like cement, steel, coarse & fine aggregate, and Bitumen as follows:

Reasonable Rate = Rate of item in latest CEA’s SOR + A2

Where A2 will be arrived by adding difference in rates existing in the market and the corresponding item rate in CEA’s SOR.

Negotiations by Tender Negotiation Committee

The EMPLOYER shall have a Committee which is constituted to hold discussions with the lowest bidder in the opening of a tender. This shall be only in cases where the amount quoted is found to be more then the Reasonable Estimated Cost of the Project and when certain clarifications are required from the bidder. The composition of the Negotiation Committee is as follows:-In course of discussion between the committee and the bidder, whenever the

bidder willingly admits to give a rebate / discount over his quoted rate; then the bidder is expected to convey his renewed offer or clarifications through letters. All such offers and clarifications conveyed by the bidder through letters are collected as records and later on they form part and parcel of the Agreement of Contract between EMPLOYER and the Bidder.In the tendering process the Committee holds discussions with the Lowest Bidder only, when it is observed that the Lowest Quoted Bid (L1) is more than the Estimated Cost of Bid/Tender. Eventually, in cases when it is observed by the Consultant that the Comparative Statement and Evaluation Report on the Financial Bids, there are Abnormally High Rates (AHR) quoted by L1 Bidder for any of the items, then in such cases attempts shall be made by the Committee through discussions for justification and remedy.

Award of Contract

After approval of Bid of the successful bidder by the competent authority, the

successful bidder will be formally notified of the award by the order prior

to expiration of validity period. The letter called “WORK ORDER / LETTER

OF ACCEPTANCE” will state the sum(contract price) that the Employer

will pay to the contractor in consideration of the

execution/completion of works by the contractor subject to furnishing of a

performance security by stipulated date (period stated in the ITB). The letter of Intent/ Work order will be sent to the

contractor by FAX/Telex duly confirmed by Registered Letter.

Also, a formal contract agreement duly signed between the Employer and the successful bidder (Contractor) will be

entered into, incorporating all documents which will constitute the

contract.



Case Study: Scrutiny of Tender for International

Competitive Bidding

Following is the Case Study of TenderScrutiny for the project Mumbai Urban Transport Project Santacruz – Chembur Link Road (section II) CH. 1+250 to2+775 – Main R.O.B & Viaduct, CH. 0+375 to 1+200 – Nehrunagar - L.T.T Arm which was carried out by Mumbai Metropolitan Region Development Authority (MMRDA) on behalf of Government of Maharashtra. The type of bid was International Competitive Bidding and the type of contract was Item Rate. The period of construction was 24 months and the bid security to be provided was Rs. 8.4 million. Table 1 shows the list of the list of the bidders

Out of the 9 bidders only 3 of them were qualified in the pre-qualification while others were rejected because of various reasons. The list of qualified bidders included AFCONS, CITIC – BIECO JV & Gammon India Ltd. Table 2 shows the bid price they submitted:

Evaluation of substantially responsive bids

The substantially responsive bids have been further checked for:a)Arithmetical error.b)Conversion to single currency adjustment in the bid price excluding provisional sums.It was noticed that there no arithmetical error & Conversion to single currency in respect of M/s AFCONS & M/s CITIC-BIECO JV was carried out. There was no difference in price quoted including euro component when converted to INR. Ranking was provided for the substantially responsive bids in terms of price bid provided by them and in ascending order. Table 3 shows the ranking of bids.

Figure 1.shows the graphical details of the price bid breakdown of each of the bidders and comparing them with the actual cost that was estimated.

The figure shows that AFCONS had bid the maximum price bid while CITIC-BIEJC JV had minimum price bid.

TTaabbllee 22:: LLiisstt ooff qquuaalliiffiieedd bbiiddddeerrssSSrr..NNoo NNaammee ooff BBiiddddeerr BBiidd PPrriiccee ((RRss..))1 AFCONS 89,60,00,000.002 CITIC – BIECO JV 74,30,68,474.413 Gammon India Ltd. 79,90,60,542.00

TTaabbllee 33:: RRaannkkiinngg ooff SSuubbssttaannttiiaallllyy RReessppoonnssiivvee BBiiddss

GGrroouuppNNaammee ooffBBiiddddeerr

RRaannkk BBiidd PPrriiccee iinn RRss..((AAfftteerr aarriitthhmmeettiicc cchheecckk))

EEvvaalluuaatteedd BBiiddPPrriiccee iinn RRss..

((AAfftteerr aappppllyyiinnggmmaarrggiinnaall pprriiccee

pprreeffeerreennccee))

BCITIC –

BIECO JVL1 743,068,474.00 798,798,610.00

AGammon India Ltd.

L2 799,060,542.00 799,060,542.00

A AFCONS L3 896,000,000.00 896,000,000.00

TTaabbllee 11:: LLiisstt ooff BBiiddddeerrss

BBiiddddeerrNNoo..

NNaammee ooff BBiiddddeerrCCoouunnttrryyooff oorriiggiinn

GGrroouupp

Bidder 1 AFCONS Indian DomesticBidder 2 CITIC – BIECO JV China OthersBidder 3 Gammon India Ltd. Indian DomesticBidder 4 IRCON International. Ltd Indian DomesticBidder 5 IJM Corp., Bhd., Malaysia Malaysia OthersBidder 6 Larsen & Toubro Indian DomesticBidder 7 NEC – VNC JV Indian DomesticBidder 8 SIMPLEX – MRV JV Indian DomesticBidder 9 U. P. State bridge Corporation Indian Domestic

Figure 1: Histogram showing comparison of various price bids

0100000000200000000300000000400000000500000000600000000700000000800000000900000000

1E+09

ESTIMATED COST

AFCONS CITIC-BIECO JV

GAMMONS INDIA

TOTA

L CO

ST(R

UPE

ES)

NAME OF THE BIDDERS

COST COMPARISON TO ESTIMATED COST



Table 4 shows the details of the activity wise costs submitted by the bidders and from the table the following inferences were obtained:

a) The estimated price of AFCONS was 7.33 % above the estimated cost which was the highest while CITIC-BIECO had 10.987 % below the estimated cost which was the least. This is further elaborated in the histogram shown in Figure 2.

b) The major reason behind the higher quotes was that the AFCONS had quoted Absurdly Higher Rates for Bridges & Grade Separators which was higher than even 10 % hence was not acceptable.

c) The Rebate Value of CITIC-BIECO was highest because it was a foreign company and this was the major reason of their lower quotations.

d) Gammon India had quoted higher rates for Environmental Mitigation Measures as well as Instrumentation for Structures which resulted in higher quotes than CITIC-BIECO.

e) Therefore after comparing all the values the bidders were given the ranks from L1 to L3 where L1 was for the lowest bidder while L3 to the highest bidder thereby in ascending order of the price bid quotations.

f) Hence CITIC-BIECO were given the rank as L1 while GAMMONS INDIA were given the rank as L2 where as AFCONS were the highest quoted and given the rank as L3

Various other details were also asked to be submitted Table 5 shows the particulars of various bidders while Table 6 shows the General Information provided by the bidders. They areshown in the following pages:

Table 4 : Activity wise breakdown of estimated cost

SR.NO DESCRIPTIONTOTAL

AMOUNTAFCONS

CITIC –BIECO JV

GAMMON INDIA LTD.

1 Site Clearance 651175.00 2450600.00 2113458.36 1700500.00

2 Earthwork and Ground Improvement 12201060.00 11329708.00 11697819.00 8119435.00

3 Drainage and Protective works 713516.00 676550.00 1182970.00 751280.004 Pavement 13951843.00 14462900.00 15488057.00 14261521.005 Utility Relocations 2200000.00 220000.00 2200000.00 2200000.006 Bridges and Grade Separators 778426212.00 903635664.00 758404367.00 799371880.007 Road Markings 1027100.00 636780.00 1482406.00 1205920.008 Traffic Signs/ Road Furniture 4619527.00 788350.00 2754325.00 950400.009 Traffic Management, Landscaping 4616614.00 769730.00 3361131.00 3451900.0010 Environmental Mitigation Measures 1744000.00 2675400.00 2722386.00 5485500.0011 Street Lighting & Electrical 9953310.00 9988400.00 4107370.00 7489990.0012 Traffic Signal System 688645.00 59800.00 793835.00 787050.0013 Instrumentation for Structures 4000000.00 1800000.00 1375000.00 1900000.00

Total 834793002.00 949493882.00 807683124.36 847675376.00Rebate, If Any (%) - 5.686 8.000 5.75Grand Total 895992329.10 743068474.41 799060541.88% Above and Below 7.33% above 10.9% below 4.28% belowRank L3 L1 L2

Figure 2: Histogram showing cost variation from the estimated cost of various bidders

-1E+08-80000000-60000000-40000000-20000000

020000000400000006000000080000000

AFCONS CITIC-BIECO JVGAMMONS

INDIA

Column1 61199327.1 -91724527.59 -35732460.12

TOTA

L CO

ST(R

UPE

ES)

NAME OF THE BIDDERS

COST VARIATION FROM ESTIMATED COST



Table 5:Particulars of various BiddersSr.No Particulars AFCONS CITIC-BIECO GAMMONS INDIA

1 Country of Origin India China India

2 Classification (Group A / B) A B A

3 Total Bid Price:3.1 In Bid Currencies INR INR INR

3.2 In INR after conversion and after exercising arithmetic checks

895992329.10 743068474.41 799060541.88

4 Credentials (Rs. In Million) 160 US$ 15 millions 180

5 Letter of Authority Yes Yes Yes

6 Commercial Assessment Responsive Responsive Responsive

7 Technical Assessment Responsive Responsive Responsive

8 Decision on ResponsivenessSubstantially Responsive

Substantially Responsive

Substantially Responsive

9Capacity cum Capability Assessment (Post Qualification)

Given SeparatelyGiven

SeparatelyGiven Separately

10 Validity of Bid 120 Days 120 Days 120 Days

11 Bid Security Rs. 8.4 Millions US$ 178,000 Rs. 8.4 Millions

11.1 Form of Bid Security Bank Guarantee Bank Guarantee Bank Guarantee

11.2 Bank and BranchUCO Bank, Nariman Point, Mumbai

Bank of India, Overseas Branch, Mumbai (with deviation)

Allahabad bank, WTC, Mumbai

11.3 Expiry Date (Due Date 11-02-2004) 31-03-2004 15-02-2004 15-03-2004

11.4 Amount (Required Amount INR 84,00,000/-or US$ 178,000)

Rs. 84,00,000/- US$ 178,000 Rs. 84,00,000/-

12 Letter of Authorization (POA) Provided Provided Provided

13 Bid Form Filled in Filled in Filled in

14 Exceptions to Clauses, if any NIL NIL NIL

15 Price Adjustment, if any Provided Provided Provided

16 Bid CurrencyAlternative - A (in euro)

Alternative - A (in dollar)

INR

17 Technical Deviation, if any NIL NIL NIL

18 Decision on Commercial Responsiveness Responsive Responsive Responsive



After checks of all the above points, it isinferred that M/s CITIC-BIECO JV is the

lowest substantially responsive bidder.Hence the Contract was awarded to M/s CITIC-BIECO JV.

But as the company didn’t turn up to work, contract was eventually awarded to M/s Gammon India Ltd.

Table 6:General Information of Various Bidders

Sr.No Particulars AFCONS CITIC-BIECOGAMMONS

INDIA

1Constitution of Company or Legal Status, place of Registration, principal place of business

Provided Provided Provided

2Achieved in at least 2 financial years minimum annual financial turnover at least of value Rs. 840 millions during

last five years1998-99 28383.00 5973.93 25195.211999-00 29059.00 3104.45 25957.202000-01 31037.00 3827.94 22323.202001-02 40685.00 4011.98 17744.132002-03 42496.00 4212.59 9326.73

3 Performance as Prime contractor in similar nature in piling, RCC and PSC etc. in one yearCement concrete (M-30 Grade and above)(cu.m) 12500 56219 67290

Prestressed concrete (M-40)(cu.m) 18000 20500 19070

Piling work 0.90m (Min.)(km) 7500 11436 12754

4 Major items of Contractor's equipment proposed for ContractAggregate crushing Plant - 200TPH 1 No. 6 No-100 -200 To be procuredAutomatic Concrete batching 2x120 cu.m/hr 2 No. 13 No.30cum/hr To be procuredTransit mixer (5/7 cu.m) 18 No. 24 No - 6 cum 16 No. 6 - 8 cum

Concrete pumps 6 No. 9 No.-25cum/hr4 Nos - 25 cum/hr 2Nos - 30 cum/hr

Boring Rig 31 No.- 60 m 6 No.

Cranes, ,hoist, electrical winches 3 No.84 No. - 15 to 100T

4 No.

Prestressing/Grouting equipments 2 No. 113 No. 2 No.Lab testing equipments 2 No. 12 No. 2 No.Piling machinery 8 No. 6 No. 4 No.

5Qualification and experience of key personnel for execution of contract - both on site & office


6 Proposal for sub-contracting Not Proposed Not Proposed Not Proposed

7Evidence of access to lines of credit & availability of other financial resources (Rs. 160 million)

Export-Import Bank of India, WTC, Mumbai INR. 160 million

US$ 15 million of Bank of Communication, Beijing Branch

Nil

8 Information regarding litigation in last five years Provided Provided Provided 9 Misleading information Not Found Not Found Not Found

10Proposal Methodology & programme of construction


11 JV as per format NA Provided NA12 Additional requirements (Not demanded) NA NA NA

13Reports on financial standing - last five year -Profit & loss statement


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