The two areas of concern with non-standard bids are related to joint bids and alternative bids.
Looking first at the question of joint bids, it often happens that two or more parties wish to combine their efforts and submit a joint bid as in a case, for instance, where each can satisfy only part of the requirement.
Joint bids may present a problem for several reasons. First it may be unclear whether each of the parties is undertaking a commitment for the full supply or whether the commitment of each is limited to a particular part of the supply.
If the second situation applies, usually neither of the parties will want to be responsible for any breach by the other party.
The consequent legal result is that whereas the municipality put out a tender asking for the supply of say, widgets and cams it now finds it has received two offers in response, one for widgets, the other for cams. Such an offer doubles the administrative requirement associated with the supply in question.
A further problem is that both parties will often want the final say over the contracting process. A joint veto on any question that needs to be settled is clearly undesirable from the municipality’s perspective.
Given these problems, many municipalities make it a standing practice to exclude joint bids at least in the majority of cases. Where this is not done, it is advisable to make clear provisions in the tender guidelines with respect to such issues as:
Which joint bidder will have the responsibility for which aspect of the bid;
setting the cause of any deficient performance that is rendered (there are obvious problems in allowing each of the joint bidders to blame the other, every time something goes wrong);
flow of payments. Are both of the bidders to be paid separately, or is the money to be paid to one and then the other;
the flow communication (e.g., giving directions concerning the performance of work);
the right of the municipality to terminate the contract; or
the municipality’s right of set-off.
A key point to note is that joint bids increase the scope and extent of risk to which the municipality is exposed.
From the municipality’s perspective, in nearly all cases, a more preferable arrangement is for the junior partner in any joint venture to be brought in as a subcontractor with the senior partner playing the role of general contractor.
With a joint bid, the main problem is to determine who is bidding to supply what.
In an alternative bid, it can often be difficult to determine what it is exactly that a single bidder is offering to supply.
The process of alternative bidding is sometimes necessary because it allows the municipality some flexibility from the general rule that a tender is solely in a competition over the price of the supply that is to be made.
For instance, a municipality may need to know if a given supply may be made in different ways or it may wish to know the price implications of securing a higher quality of supply as well as some minimum standard of supply.
In some cases, the bidder may feel it necessary to offer an alternative because it may doubt whether the specific supply that the municipality has requested in its tender will work for the purposes that the municipality has specified.
For instance, in a tender for the supply of bus tires, the manufacturer’s specifications of tire provided may include a shorter work life than what the municipality has required in the specification.
The supplier thus offers the municipality the alternatives of the manufacturer specifications or the performance specification, thus leaving it up to the municipality to make the choice.
Stephen Bauld is a government procurement expert and can be reached at swbauld@purchasingci.com. Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.
Recent Comments
comments for this post are closed