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REASONABLENESS OF PRICE - TENDER EVALUATION

 

One of the important factors that ultimately facilitates order placement is the reasonableness of the L1 (Lowest offered Price / Tenderer) price.
That is , it is not only the Techno-commercial suitability phase that a tender has to successfully pass but the tender , even after being L1, has to be within the ambit of price reasonability for getting the order.

Main Guidelines determining Reasonableness of price:

  • Last purchase price of same (or, in its absence ,similar) item
  • Current market price of same (or, in its sbsence, similar) item
  • Price of raw materials (which go into the item)
  • Receipt of competitive bids from different sources
  • Quantity involved
  • Terms of delivery
  • Period of delivery
  • Cost of analysis (Material cost, Production cost, over heads, profit margin)
  • Purchase price through a 'distress sale' or distress / emergency purchase is an accurate guideline

Quoted Price Not “Reasonable"

If L1’s price is above reasonable limit, then  the correctness of the estimated value is once again rechecked w.r.t. present market scenario and /  or any other factor

If the estimated value is correct , then the options are :

  • Price negotiation with L1 i.e. the lowest offered Techno-commercially suitable tenderer
     
  • Retender with appropriate wider publicity with same terms and conditions and specification or with suitable modifications in the same
 
 
 
 
 
 
 

Transparency in Public procurement
Acceptable Supplier / Offer
Single Tender Enquiry (STE)
Limited Tender Enquiry (LTE)
Open Tender Enquiry (OT)
Global Tender Enquiry (GT)
INCOTERMS
Procedure For Tender Evaluation
Reasonableness of Price
Contract Management
 
 
 

 

 

 

 

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