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Para 8.5.9 - Bid Rejection | KartavyaDesk

Consultancy Manual

Original Rule Text

1. The Procuring Entity has the right to cancel the process of procurement or reject all bids at any time before intimating acceptance of successful bid under circumstances mentioned below. However, such rejections should be well considered and normally be in cases where all the bids are either substantially in deviation to the ToR or considered unreasonably high in cost and, if in the latter case, the lowest qualified bidder during negotiations fails to reduce the costs to a reasonable level. If it is decided to re- invite the bids, the ToR should be critically reviewed/modified so as to address the reasons of not receiving any acceptable bid in the earlier Invitation for bids. The Procuring Entity may cancel the process of procurement or rejecting all bids under circumstances mentioned below:

What This Means

Para 8.5.9 of the Manual for Procurement of Consultancy Services gives the government department (the 'Procuring Entity') the power to cancel the entire bidding process or reject all bids received. This isn't something they can do on a whim. It's reserved for situations where the bids are significantly different from what was asked for in the Terms of Reference (ToR), or if the costs quoted are unreasonably high. Even then, the department must first try to negotiate a lower price with the best bidder. Only if those negotiations fail can they consider canceling the process. If they decide to re-invite bids, they need to carefully review and change the ToR to address the reasons why the initial bids were unacceptable.

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Key Points

  • •Procuring Entity can cancel the procurement process or reject all bids.
  • •Cancellation/rejection is justified if bids deviate substantially from the ToR.
  • •Cancellation/rejection is justified if costs are unreasonably high and negotiations fail.
  • •If bids are re-invited, the ToR must be reviewed and modified.
  • •Rejections must be well-considered and documented.

Practical Example

The Ministry of Rural Development issued a tender for consultancy services to evaluate the effectiveness of a rural employment scheme. The estimated budget was ₹50 lakhs. Three bids were received: ₹75 lakhs, ₹80 lakhs, and ₹90 lakhs. All bids were deemed technically qualified. However, the lowest bid of ₹75 lakhs was significantly higher than the estimated budget. The Ministry attempted to negotiate with the lowest bidder, M/s Vikas Consultants, but they refused to lower their price below ₹70 lakhs. Since the cost was still considered unreasonably high, the Ministry, after proper documentation and internal approvals, cancelled the entire procurement process. They then critically reviewed the ToR, identified areas where the scope could be narrowed, and re-invited bids with a revised ToR and budget.

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Frequently Asked Questions

Can we cancel the tender process simply because we don't like the lowest bidder?▼
No. Cancellation is only permitted under specific circumstances, such as substantial deviation from the ToR or unreasonably high costs, and after attempting negotiation.
What constitutes 'unreasonably high' cost?▼
This is determined by the Procuring Entity based on market research, budget availability, and the complexity of the assignment. It should be documented with justification.
If we cancel the process, are we obligated to re-invite bids?▼
Not necessarily. However, if the need for the consultancy still exists, re-inviting bids after revising the ToR is generally recommended.
What happens if only one bid is received?▼
The Procuring Entity can evaluate the single bid. If it meets the requirements and the cost is reasonable, the contract can be awarded. If not, the process can be cancelled, and the ToR reviewed before re-inviting bids.
Is there a specific format for documenting the reasons for cancellation?▼
While there isn't a prescribed format, the documentation should clearly state the reasons for cancellation, the attempts made to negotiate, and the justification for considering the costs 'unreasonably high' or the deviations 'substantial'.

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Test Your Knowledge

Question 1 of 3

Under what circumstances, as per Para 8.5.9 of the Manual for Procurement of Consultancy Services, can a Procuring Entity cancel the procurement process or reject all bids?

Related Rules

Para 8Manual for Procurement of Consultancy Services, 2025 - Para 8 - Chapter 10 - Annexure 18Para 9Manual for Procurement of Consultancy Services, 2025 - Para 9 - Chapter 10 - Annexure 18Para 1.10.2Manual for Procurement of Consultancy Services, 2025 - Para 1.10.2 - Chapter 1Para 1.11Manual for Procurement of Consultancy Services, 2025 - Para 1.11 - Chapter 1Para 1.13Manual for Procurement of Consultancy Services, 2025 - Para 1.13 - Chapter 1

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