How is tender evaluation done? Process and how it works?

Do you know how the tender evaluation process works? Are you aware how a buyer opens each tender? Amidst many criteria, varied quotes and competition, there is a well-defined tender evaluation process. The tender evaluation committee follows guidelines for rejecting and accepting a bid. Also, there is a strategic process that the committee follows.

Tendering today is an online process. Whether it is for state or central tenders, the e-tendering process has been designed for transparency, efficiency, and speed. Right from finding a relevant tender to the online procedure for govt. tender submission, there is a method that bidders need to follow – and a method that buyers (tender authorities) have to abide by for evaluating the bids and awarding the tender to the most suitable bidder.

This article outlines tender evaluation method and its importance, and why as a potential bidder you should know about it.

Basics of tender evaluation: Tender evaluation stages

Usually, there is a tender evaluation committee to evaluate tender responses and quotations that the buyer receives. Although the criteria used in each tender evaluation differs, there are five stages of tender evaluation and the best one is chosen on the parameters outlined for each phase. Here are five stages of tender evaluation.

1. Pre-qualification stage

The tender evaluation process starts with pre-qualification stage. Bids are opened in the pre-qualification stage. The evaluation committee has a checklist of qualifications to be fulfilled. Bidders who fulfill those criteria are the only ones who qualify for the next stage. This checklist generally includes following:

• Availability of specified infrastructure to carry out the project
• Adherence to the financial qualification i.e., audited financial report of the company
• Necessary licenses and other certifications
• Other mandatory documents that include GST details, MSME registration, etc.

If your company is not able to meet any criteria mentioned in the tender announcement, your bid will be disqualified in this stage. For example, if the tender announcement mandates that companies having turnover of ₹50 crore and above can bid, and your company’s turnover is below this specification, then your bid will be disqualified despite adherence to other criteria. All mandatory required documents for the tender are checked at this phase.

2. Earnest Money Deposit

Once the evaluation committee selects eligible bidder, the next stage is ensuring that the earnest money deposit (EMD) is submitted. The qualified bidders who meet the criteria and qualify for the next stage are required to deposit EMD (security amount) within specified timeline. EMD assures buyer that seriousness of the bidder. Moreover, it is refunded to the bidders who do not win the contract.

3. Evaluation of technical bids

Once bidders deposit EMD, the technical aspects of the tender is evaluated. Evaluation committee then studies the technical aspects of bidders. These technical aspects may include capacity and capability of the bidders to deliver required quality and quantity on time, similar work experience, required compliances, certifications, availability of resources and manpower, etc. The committee rates bidders on each criterion on the scale of 0-10.  The committee further decides a cut-off limit for shortlisting the bidders and these bidders make their ways to the final phase.

4. Evaluation of financial aspects of the bid

After the technical evaluation, the committee focusses on the last aspects i.e., prices quoted by the shortlisted bidders. There is a specific format for quoting a tender price, and the buyer will evaluate the tender bid by adhering to the specified format.

In this stage as well, the bidders are given points basis the offers made. And, bidders labelled as L1 (Lowest bidder), L2 L3 and so on.

5. Final step

Finally, bidder’s score in the technical phase and financial phase are summed up to arrive at a winner.

Closing remarks: Checklist for bidders

• Submit all mandatory documents and proofs, else you are likely to be eliminated in the first phase for non-compliance of mandatory requirements
• Do not bid if you do not fit in the criteria. Sometimes, buyers ask for a tender fee to be submitted, which is non-refundable. If you know that you will not make it to the second phase, then you will lose tender fees.
• Keep EMD money handy, if you know you meet all criteria and are confident to make it to the next level.
• Make a robust tender response document. Remember that there is no scope of presentation or personal touch. Only your documents need show your strength and confidence. Hence, add much as relevant information possible.
• Bear in mind that the lowest bid does not always win. In fact, technical criteria have its own weightage and well-considered in the evaluation process.