grp 4gbhgh.docx

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Question : Comments ?

BS 6 A bidding document for a major construction estimated at Rs 300'm,

required a bid security in a form of a bank guarantee (BG) or a Letter of

Credit (LC) or a cash deposit (CD), for an amount equivalent to 1% ofbid amount. Bids were to be valid 91 days from the deadline for

submission of bids. The bid security shall be valid 28 days beyond thevalidity of bids. Bids were closed on September 2, 2004. Details of someof the bid securities furnished by bidders are as follows:

BidderBid value

(LKR)

Value Type Validity date I

A 352 Rs 3.52 m BG Dee 30, 2006

B 345 US$ 34,300 LC Dec 31, 2006

C 345 Rs 3.45 m IB Dec 30, 2006

D 378 US$ 39,000 BG Dec 30, 2006

E 355 Rs. 3.25 i-n BG Dec 30, 2006

F 353 3.53 (Only a photo copy of a

BG, submitted with bid; the

original received 2 days later

Dec 30, 2006

ens-tc. -)

FTn m en nnnU,3,D -tZ-,OVV

Lk- ucc -) I , /-VVO

H 330 Rs. 3.3 m BG Dec. 2, 2006

I 348 Rs. 3.5 rn BG Dec 29, 2006

[Note: The official exchange rate on Sep 2, 2006 was 99.0 and on December 2, 2006

was 100.0; 345199 = 3.484848; ; 3781199 = 3.818182; 423/99= 4.2727271

Which of the above bid securities you consider as acceptable?

BS 7 An

in

are

Afteragency invited quotations from 7 bidders on

Nationalrespect of Printing, Supply and Delivery of Booklets

bidding period of 7 days, there were only 3responses

as follows:

Shopping basis

(18,750 Nos).

and bid prices

as requested in the

TheLetter

A 5,455,312B 3,124,875C 5,462,859

lowest bidder "B"'s did not submit a Bid Securityof Invitation.

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The TEC recommendation is that the 2nd lowest, "Bidder A ", be

awarded since the bidder which submitted the lowest quotation did not

submit the Bid Security.

Can the bid "B" be accepted due to following reasons?

1. The price difference between the lowest quotation and the

2nd lowest is Rs.2,330,437.50, for printing of Booklets,which is a substantial.

2. The bidder who submitted the lowest quotation

subsequently sent a letter stating that, he could not send the

Bank Guarantee and ready to do so now.3. The delivery period is 21 days which is considered as a very

short period

TECHNICAL COMPLIANCE

TC 1 A supplier submitted a bid on a piece of equipment which he said fully

met the bid specifications and attached a catalogue sheet to his bid

submission. There was a discrepancy between the specifications detailedin the offer and the specifications printed on the catalogue sheet; those on

the latter did not meet the requirements laid out in the bid specifications

whereas those stated in the bid complied. The PE disqualified the bid(which was the lowest price) on the grounds that the specifications were

not met as evidenced by the catalogue sheet. The bidder argued that his

did comply as lie had undertaken in his offer specifically to supply

according to the technical specifications in the bid document and the

catalogue sheet was only a reference material. Therefore, he said he

should be awarded the contract as thelowest evaluated bid.

What should the Purchaser do?

TC Z An implementation agency called for bids for a container crane with aminimum lifting capacity of 40.6 metric tons. A bidder quoted his pricei iuf we standard container crane tie manufactures, which has an

operating capacity of 40 metric tons. The executing agency decided to

disqualify the bidder because it did not meet the minimum specified

lifting capacity.

Is the bid substantially responsive and acceptable?TC 3 For a transmission line project, a PE invited bids for 100 km of aluminum

core steel reinforced conductors. The bid specification stipulated,

among other things, that the aluminum should be a minimum of 95%

purity. When the bids were evaluated, the PE proposed award to thesecond lowest evaluated bidder on the argument that he offered

conductors with 97% purity, and the additional cost was more than

balanced by the reduced losses in conduction. The bidding documents

merely specified the minimum threshold for purity.

How will you address this issue?

TC 4 The bidding documents for some process equipment included a capacity

and performance specifications. During the evaluation process, the PE

found that the two lowest responsive bids (from Firms A and B) met all

the technical requirement but that the second lowest bidder (Firm B)

had included some features which the PE considered non-essential andover and above those called for in the specification. The PE proceeded

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to deduct the value of these features from B's price. This deduction

made B's bid lower than A's and the PE recommended that the contract

be awarded to B.

is this the correct treatment of the bid?

TC 5 A project included the procurement of 4wheel drive vehicles to be

procured by ICB. The technical specifications stated the following:

Type 4 wheel driveFuel Diesel

Engine 175HP at 4500 RMP

Wheel Base 21 feet 6 inches

Suspension Heavy Duty

Fuel Tank 70 liters

Ground Clearance 15 cms.Transmission Standard Shift

Eight bids were received with the required bid security and requireddocuments. The PE, as a result of bid evaluation, rejected all but the

highest bid on the basis that the, failed to comply with one or more of

the technical specifications listed above.

Question:a) Do these specifications meet the concept of good equipment

specs?

b) What should the bidders have done when they received the

bidding documents?

c) If you had received a query from the bidders, what would you

have done?d) If you had to r1pnr thic hid wcu!d yc~u

4Z:vz scn', ' , Lc

no objection to issue the bid documents?

TC 6 In an agricultural project in Latin America, the PE invited bids for a plant

for producing sugar cane juice from sugar cane. In the detailed

specifications, it was stated that the cane should be crushed using steel

rollers powered by an A.C. electric motor operating at 220 volts SO

cycles; there should be three stages of rollers. The first stage with

rollers diameter of 200 cm rotating at 5 rpm and the second stage with

rollers of 100 cm rotating at 25 rpm and the final stage with rollers of 10

cm diameter rotating at 100 rpm.Four bids were received. In the evaluation, the PE rejected the lowest

bid from Australia and proposed award to the second lowest bid from

Brazil. The Australian bidder protested claiming that he had offered a

well proven machine widely used all over Asia. Bank queried the PE who

responded that the Australian machine was technically non-responsive

because it used only two stages of steel rollers instead of three and with

different diameters and speed, and hence, failed to comply with the bid

specification. Moreover, the PE had no prior experience with such a

machine.

Question: How do you analyse ?

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BID COMPARISION

BC 1 1. The five bids for construction of the hospital, clinic and powerhousewere after technical evaluation:

US$Foreign Company 1 1,820,000Foreign Company 2 1,890,000Local/Foreign 3 1,970,000Foreign Company 4 2,247,000

Foreign Company 5 2,647,000

2. The Government's estimate for the work was US$1,200,000. Thelow bid is therefore 50% higher than had been expected. At least

three alternatives are open to the Government as to what should bedone in this case:(a) Reject all bids and call for new bids;

(b) Award the contract to the low bidder but cut down the workcalled for in the contract, to somewhere nearer US $1,200,000;or

(c) Reject all bids and enter into negotiations with the low bidderor a few low bidders to find out why they have come in so high

and try to alleviate that problem.3. Keeping in mind (i) the time delay and additional cost in going out

for new bids, (ii) the technica l difficulties in "redesigning" theproject so an award could be made on a slimmed down basis, (iii)the lack of competition in awarding the contract according to the

"new" design, and (iv) the possibilities for unfair pressure on

bidders, and the potential for lack of competition in a negotiationsituation:

(a) Which of the three courses set out above would you follow,and why?

(b) If you chose (a) above what steps would you take toexpedite the new bidding? and

(c) If you chose course (c) above which company or companieswould you invite to enter into negotiations, and why?

BC 2: The bidding documents require that the bid should be valid for a periodDiscount of 90 days from the deadline for submission of bids. Five bids have been

received by the Agency. Some of the bidders offered discounts indifferent manner as follows.

Name Original

Bid Price

Condition Bid price if Discount is

considered

A 25 M 6 % discount if awarded

within 60 days

23.5 M

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B 26 M None 26 M

C 24 M 5 9/o discount i f awarded

within 90 days

22.8 M

D 27 M 10 % discount with a

modification letter

submitted along with the

bid.

24.3 M

E 25.8 M 12% discount with a letter,

registered on the day

before the submission of

bid but Purchaser receive

one day after bid close

22.7 M

gency processe t e eva uat on expe t ous y w t n ays o9 1

opening and determined the bidder E at a contract price of 22.7 M as thelowest responsive after taking into account the discount of 12 % alongwith the discounts offered by other bidders.

a) Is the decision of the Agency Correct?b) Which of the above bids that you consider as substantial

responsive?

c) What is your recommendation for the award of contract?

BC 3:

Loading The bid documents for water pipe and fittings contained alternatef...-Ccncrctc ai-id st&z:: P;Ytf, '1111JUJIfir, thefor internal and external coating. Six bids were received, of which the

three lowest were close, varying from (local currency units) 5.3 million of

5.6 million, as follows:

Bidder No.1(steel pipe) 5.3 million

Bidder No.2(steel pipe) 5.5 million

Bidder No.3(Concrete pipe) 5.6 million

During evaluation, the Executing Agency decided that cathodicprotection should be provided if steel pipe were selected.

It, therefore, adjusted the bids for steel pipe by adding to the bid price

the cost of providing cathodic protection, even though the bid

documents neither required cathodic protection to be included in the

prices quoted for steel pipe nor stated that it would be used as a factor

in the evaluation of bids.

The Executing Agency based its decision on the statement in the biddocuments that "to determine the lowest responsive bid, operation and

maintenanc

costs will also be considered".

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After adjustment of the bid prices quoted by bidders Nos.1 and 2 for

steel pipes, Bid No.3 became the lowest evaluated bid. The Executing

Agency, accordingly, proposed award of the contract to Bidder NO 3.

Questions:

Do you agree with the evaluation of bids by the Executing Agency?

If not, which bidder should be awarded the contract?

Assuming that cathodic protection of steel pipe was needed, how

should the Executing Agency proceed to procure it?

POST QUALLIFICCATION

POQ 1: The PIU using NCB method issued standard BD for works for patching

potholes and repairs for an urban road with an estimated value of about

$200,000. Evaluation of bids was to be based on a post qualification

process of the bids using the standard criteria provided in the Bank BD

for small works. By bid closing date, five bids were received and thelowest priced bid was lacking data on audited financial statements. Youare the chairman of the evaluation committee.

Should this bidder be recommended for award of the contract

POO. 2: On an NCB procurement, for the procurement of civil works for the

reinforcement of river embankments, estimated to cost US$3.3 million,

the Employer received a complaint from a bidder, ANDERSON, that it

had submitted the lowest-priced bid but that the TEC had rejected its

bid incorrectly.

Upon reviewing the bid evaluation report prepared by the TEC, the PC

f3ur,d ANDERSON ;idd, indeed, submiiied me iowest-priced bid but

that the TEC had rejected its bid on the grounds that ANDERSON did not

possess the required experience, as defined in the bidding documents,

namely that "bidders should have completed at least two contracts ofsimilar nature and complexity in the past five years".

In its bid, Anderson provided a list of the following contracts to

demonstrate its past experience:

Name of Contract Contract Year of

Price (m) Completion

Civil Works for the Reinforcement of River US$4.0 2002

Embankments

Civil Works for the Reinforcement of River US$4.5 2003

Embankments

However, ANDERSON's bid indicated that the two contracts cited had, in

fact, been performed by a company, ANDERSON -BOB, which is a

company wholly owned by ANDERSON, although it is a separate legal

entity.

The TEC's bid evaluation report recorded that, because ANDERSON -BOB is a separate legal entity from ANDERSON. ANDERSON cannot rely

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on ANDERSON - BOB's experience in attempting to demonstrate its own

experience. In its letter of complaint, ANDERSON protested that,

because it fully owns ANDERSON - BOB, its experience should be

counted as ANDERSON's experience and that ANDERSON should,

therefore, be awarded the contract.

Question

How should you respond to Anderson's complaint?POQ 3: An Agency invited bids for 100 PCs for supply to an education institution.

Procurem In respect of post qualification criteria, bidding document required that

ent of the bidder shall be original manufacturers and the PC offered shall be a

Computer model which is mass produced, has been previously supplied, and in use

s in an Asian country, and has a proven experience of at least 24 months.

Five bids were received. In its evaluation PE rejected iected bid K, L and

M and

recommended award to P on the grounds that Bid K was not submitted

by a manufacturer, Bid L had not supplied in Asia and Bid M did not fulfill

the minimum proven experience. Bidder M protested that the PC

offered by him was indeed in proven service for 28 months on the dateof evaluation even though it was in proven service for only 23 months

Bid K LKR 10. 5 m CIP Colombo

Bid L LKR 10.9 m CIP Colombo

Bid M LKR 10.7 m CIP Colombo

Bid N LKR 11.8 m CIP Colombo

Bid P LKR 11.3 m CIP Colombo

To whom you will award the contract?

CONTRACT AWARD

CA 1: A number of responsive bids at reasonable prices from various supplierswere received through ICB. However, the PE found subsequently that hecould buy the item tor which bids were caked from a iocal 1

-11111 (wlmm

had not bid) at a price lower than any

of the bids received. The PE

proposed to reject all bids and procure this item (without any change in

the specifications) through direct purchase from the local firm.

Is this a good proposal? Is it acceptable under ProcurementGuidelines?

Analyse the case and give your recommendation for future

CA 2: Government of Ruritania in July 2008, using NCB method issued Bank

standard BD for small works for construction of a Teacher TrainingCenter estimated to cost about $150,000. By bid closing date, two bids

were received and the lowest evaluated bidder had submitted a bid that

was 40% less than the Engineer's estimate. You are the chairman of the

evaluation committee. Should this bidder be recommended for award of

the contract?

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CA 3: During a post audit for procurement for rehabilitation of 10 schools

estimated at Rs 30 m the following was observed:

Three bids received:

Unbalanc

ed Bid

Bid A: Rs 26 m

Bid B: Rs. 27.4 mBid C: Rs. 27.5 m

All three bids were substantially responsive.

In the BC)Q for Bid A, the unit price quoted for windows was

substantially lower than the other three bids and the estimated cost of

the Engineer

The TEC was concerned about the low rate and worried about that

Bidder A will not complete the work satisfactorily

The TEC requested the bidder to substantiate the cost of replacing

windows, giving the breakdown of labour and material.The breakdown rate was higher than that was in the bid

TEC did not want to take a risk and awarded the contract to Bidder B atRs. 27.4 m

CONTRACT ADMINISTRATION

CAD 1: Pursuant toan

ICB process, an Agency placed a contract on a supplier inIncoterm Germany for laboratory equipment for delivery CIF Incoterms at

CU'10111'00 FOrL.

Payment was to be made on the basis of a Letter of Credit on presentation

of Clean Bill of Lading, and other documents. Goods were air-freighted

and the bidder submitted the Airway Bi ll , country of origin certificate,

invoice to the bank, which paid the contract price. "The Agency refused

to take delivery [since the equipment was no more required by him] and

sued the bank for refund of the money since the LC did not permit airway

bill.Question - Is the bank right in having paid ?

CAD 2:incoterms Messrs Lemunge & Sons, a Tanzanian construction company, has

ordered from Fibro A/5, a Danish manufacturer of building materials,

10,000 fiber boards of certain dimensions, Ex Works Aalborg, Denmark,

at a price of Danish Kroner (DKK) 1,000,000.

The agreed date of delivery is 1 May, 1992, and Fibro A/S confirms by

telex to Lemunge & Sons on 20 April that the fiber boards will be

available for delivery at Fibro A/S's premises on the date agreed.

Lemunge & Sons instruct their forwarding agent in Denmark, Messrs

Fixit, to pick .up the goods and forward them to the port of Dar es Sa

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