Submitting a bid is a serious pledge

Did you know that tendering is serious business? It is not child’s play or a platform for “window shopping” by procuring entities.

PURCHASING & SUPPLY WITH NYASHA CHIZU

It is also not an invitation to treat for testing the waters for suppliers.

Public procurement laws have in place measures to minimise the risk of child play in the serious business of tendering that protect both the procuring entities and suppliers.

There is inherent risk of changing goalposts in a tender process by both procuring entity and the providers.

Provisions to manage modifications of RFPs to ensure transparency and fair treatment of prospective tenderers as well as tying the tenderers to their submissionare available.

The bid bond is the tool for tying bidders to their submissions.

Bid Bond is surety offered by the tenderer to the procuring entity that he stands by his submission during the validity of the bid.

It is, therefore, critical in a procurement process to state the required bid validity period.

A bid bond is, therefore, returned to losing participants when the contract has been signed and to the winner when all contract formalities have been completed.
Bid bond ensures thattenderers cannot withdraw or modify submission after the tender closing deadline or risk its forfeiture.

This is in line with Article 41 of the new UNICTRAL Model law and Section 11 (1) (b) of the Zimbabwe’s SI 171 of 2002 which requires a minimum validity period of 30 days from the tender closing date.

There are circumstances when the tenderer is allowed to modify of withdraw a tender without the risk of forfeiting the bid bond.

Conditions for bid withdrawal without a penalty are when the bid is withdrawn before the tender closing period, only possible for tenderers that submit bids early.

They have time to review the copy of the submitted bid and make judgement to withdraw it before the tender closing deadline without any implications.

Such bidders have capacity to recall in total submitted bids orresubmit modified bids before the tender closing period without any penalty.

The risk to procuring entities when a bid is withdrawn after the tender deadline and before the expiry of the bid validity emanate from inconveniences suffered by the entity.

The procuring entity may suffer costs associated with delays on a project due to the withdrawal.

An alternative of running a new tender process also has cost implications to the procuring entity.

The third option of awarding to the second best offerer implies paying more if the procurement decision was based on price or acquiring inferior solution when the decision was quality and cost-based.

Acceptable forms of bid bonds are cash deposit equivalent to the bid bond requested.

A bank cheque of the equivalent value of the required bid bond may also suffice.

An undertaking by a bank to guarantee the validity of the bid with a value equivalent to the required bid bond is also sufficient.

What vary are the costs associated with establishing appropriate security and a bid bond issued by a bank is the most expensive.

Submitting a bid is, therefore, a serious commitment.

Nyasha Chizu is a Fellow and member of congress of the Chartered Institute of Purchasing and Supply writing in his personal capacity. Feedback: nyashachizu@harleyreed.com

4 Responses to Submitting a bid is a serious pledge

  1. Guveya Chisi February 17, 2014 at 9:38 am #

    Procurement fraud is rife in Zimbabwe. What needs to be done to ensure that this is eradicated especially in Government Institutions. l am sure Mr N Chisu is better placed to cover this subject and produce a set of proposed procurement guidelines that will take all these loopholes into consideration.

    • Jinda February 17, 2014 at 11:59 am #

      Its a very gud observation that you have made Chisi however I would like to advise that fraud is only abated by “will”. You can have the best policy at your company or in any organization but as long as there is no “will” you wont succeed to abate fraud. If you can check the definition of fraud you will realize that its more of the perpetrator’s intentions and this is usually well calculated. More often than not fraud is driven by the environment one works in. Sometimes people really don’t want to defraud their employers but they are forced to by the circumstances. Now, to be honest with you in Zimbabwe its absolutely impossible to combat fraud because the environment itself is fraudulent. Why am I saying so? Is it not fraudulent to pay a professional person $300 while their real worth is more than $1 000? That’s what drives fraud mostly. In stable economies where the economy itself is not the biggest fraudster like in Zimbabwe you will realize that fraud levels are very law and are normally perpetrated by the highest offices in an organization not what is happening in Zimbabwe.

      That’s what I think about fraud.

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