Professional Practice :Tender Scrutiny and Award of Bids

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<p>PROFESSIONAL PRACTICE I</p> <p>Scrutiny Of Tender For Award Of Contracts A Case StudyRahul N.Sompura, Student, School Of Building Science &amp; Technology, CEPT University, Ahmedabad</p> <p>Tender Scrutiny and Award of Bids/OffersProcessing and Evaluation of BidsFor Government in line &amp; with International Government Competitive Bidding the tenders are decided 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.</p> <p>Freak Rate Itemsc) 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 in the percentage below/above the rates entered in the Schedule. In such cases in the by event the of arithmetical the error committed in working out the amount contractor, tendered percentage and not the amount should be taken into account. 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.</p> <p>Technical EvaluationEfforts are made to bring all the offers at par technically after / conducting or etc., seeking through technical discussions</p> <p>Absurdly High Rate (AHR) / Absurdly Low Rate (ALR) / Freak Rate Items:AHR/ALR ItemsThe item rates quoted which vary more than 25%as compared to the estimated rates are identified &amp; 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. During execution, the Engineer as well as the Nodal Officer may allow AHR 5% quantities stipulated in the agreement.</p> <p>clarification/documents</p> <p>correspondence before opening of the price bids. For this purpose, the prequalified 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, 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. if any in the tender</p> <p>Procedure in Scrutiny of RatesIf on checks there are differences between amount the rates out given by by him, the the contractor in words and figures or in worked 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 is taken as correct.</p> <p>RAHUL N.SOMPURA (2905)</p> <p>P a g e |1</p> <p>PROFESSIONAL PRACTICE I</p> <p>Comparative Statement of Price BidsAfter completion of the technocommercial 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 &amp; insurance, etc., as applicable for all the accepted bidders. The factors and the method of their application which have been overall prescribed price in in the the tender documents are used while working 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 ..........., L1 statement being the for different The bidders will be ranked as L1, L2, L3 lowest. 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.</p> <p>Acceptance of Tenders at market rates with allowable variationsIt 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 plus 10% 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 &amp; fine aggregate, and Bitumen as follows: Reasonable Rate = Rate of item in latest CEAs SOR + A2 Where A2 will be arrived by adding difference item in rates existing in the market and the corresponding CEAs SOR. rate in</p> <p>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 Committee shall be made by the for through discussions</p> <p>justification and remedy.</p> <p>Award of ContractAfter 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</p> <p>Analysis / Justification of RatesThe 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).</p> <p>Negotiations by Tender Negotiation CommitteeThe 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</p> <p>(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.</p> <p>RAHUL N.SOMPURA (2905)</p> <p>P a g e |2</p> <p>PROFESSIONAL PRACTICE I</p> <p>Case Study: Scrutiny of Tender for International Competitive BiddingFollowing is the Case Study of Tender Scrutiny for the project Mumbai Urban Transport Project Santacruz Chembur Link Road (section II) CH. 1+250 to 2+775 Main R.O.B &amp; Viaduct, CH. 0+375 to 1+200 Nehrunagar - L.T.T Arm which was carried out by Mumbai Metropolitan Authority Region Development on behalf of (MMRDA)</p> <p>Table 1: List of BiddersBidder No. Bidder 1 Bidder 2 Bidder 3 Bidder 4 Bidder 5 Bidder 6 Bidder 7 Bidder 8 Bidder 9 Sr.No 1 2 3 Name of Bidder AFCONS CITIC BIECO JV Gammon India Ltd. IRCON International. Ltd IJM Corp., Bhd., Malaysia Larsen &amp; Toubro NEC VNC JV SIMPLEX MRV JV U. P. State bridge Corporation Name of Bidder AFCONS CITIC BIECO JV Gammon India Ltd. Country of origin Indian China Indian Indian Malaysia Indian Indian Indian Indian Group Domestic Others Domestic Domestic Others Domestic Domestic Domestic Domestic</p> <p>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 &amp; Gammon India Ltd. Table 2 shows the bid price they submitted:</p> <p>Table 2: List of qualified biddersBid Price (Rs.) 89,60,00,000.00 74,30,68,474.41 79,90,60,542.00</p> <p>Table 3: Ranking of Substantially Responsive BidsGroup Name of Bidder Rank Bid Price in Rs. (After arithmetic check) Evaluated Bid Price in Rs. (After applying marginal price preference) 798,798,610.00 799,060,542.00 896,000,000.00</p> <p>B A A</p> <p>Evaluation of substantially responsive bidsThe substantially responsive bids have been further checked for: a)Arithmetical error. b)Conversion to single currency adjustment in the bid price excluding provisional sums. error &amp; Conversion to single currency in respect of M/s AFCONS &amp; M/s CITICBIECO 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. It was noticed that there no arithmetical</p> <p>CITIC BIECO JV Gammon India Ltd. AFCONS</p> <p>L1 L2 L3</p> <p>743,068,474.00 799,060,542.00 896,000,000.00</p> <p>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.</p> <p>The figure shows that AFCONS had bid the maximum price bid while CITICBIEJC JV had minimum price bid.</p> <p>COST COMPARISON TO ESTIMATED COST1E+09 900000000 800000000 700000000 600000000 500000000 400000000 300000000 200000000 100000000 0 ESTIMATED COST AFCONS CITIC-BIECO JV GAMMONS INDIA TOTAL COST(RUPEES)</p> <p>NAME OF THE BIDDERSFigure 1: Histogram showing comparison of various price bids RAHUL N.SOMPURA (2905) P a g e |3</p> <p>PROFESSIONAL PRACTICE I</p> <p>Table 4 : Activity wise breakdown of estimated costSR.NO 1 2 3 4 5 6 7 8 9 10 11 12 13 DESCRIPTION Site Clearance Earthwork and Ground Improvement Drainage and Protective works Pavement Utility Relocations Bridges and Grade Separators Road Markings Traffic Signs/ Road Furniture Traffic Management, Landscaping Environmental Mitigation Measures Street Lighting &amp; Electrical Traffic Signal System Instrumentation for Structures Total Rebate, If Any (%) Grand Total % Above and Below Rank TOTAL AMOUNT 651175.00 12201060.00 713516.00 13951843.00 2200000.00 778426212.00 1027100.00 4619527.00 4616614.00 1744000.00 9953310.00 688645.00 4000000.00 834793002.00 AFCONS 2450600.00 11329708.00 676550.00 14462900.00 220000.00 903635664.00 636780.00 788350.00 769730.00 2675400.00 9988400.00 59800.00 1800000.00 949493882.00 5.686 895992329.10 7.33% above L3 CITIC BIECO JV 2113458.36 11697819.00 1182970.00 15488057.00 2200000.00 758404367.00 1482406.00 2754325.00 3361131.00 2722386.00 4107370.00 793835.00 1375000.00 807683124.36 8.000 743068474.41 10.9% below L1 GAMMON INDIA LTD. 1700500.00 8119435.00 751280.00 14261521.00 2200000.00 799371880.00 1205920.00 950400.00 3451900.00 5485500.00 7489990.00 787050.00 1900000.00 847675376.00 5.75 799060541.88 4.28% below L2</p> <p>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.</p> <p>b) The major reason behind the higher quotes was that the AFCONS had quoted Absurdly Higher Rates for Bridges &amp; 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.</p> <p>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.</p> <p>COST VARIATION FROM ESTIMATED COST80000000 60000000 40000000 20000000 0 -20000000 -40000000 -60000000 -80000000 -1E+08 AFCONS Column1 61199327.1 CITIC-BIECO JV -91724527.59 NAME OF THE BIDDERSFigure 2: Histogram showing cost variation from the estimated cost of various bidders</p> <p>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 variou...</p>