Para 7.6.9 - Price Negotiation Rules | KartavyaDesk

Original Rule Text

174 2. In no case, including where cartel rates are suspected, should negotiations be extended to those who had either not tendered originally or whose bid was rejected because of unresponsiveness of bid, unsatisfactory credentials, inadequacy of capacity or unworkable rates. 3. Price negotiations may not be considered except under the following exceptional circumstances: a) Where L1 price is not considered to be reasonable, and i) the procurement is done on a nomination basis or ii) Procurement is from single or limited sources or iii) In situations where the requirements are urgent, and the delay in re-tendering for the entire requirement due to the unreasonableness of the quoted rates would jeopardise essential operations, maintenance, and safety - negotiations with L1 bidder(s) may be done for a bare minimum quantum of immediate requirements. The balance bulk requirement should, however, be procured through a re-tender, following the normal tender process. b) Where there is suspicion of cartel formation, which should be recorded, following provisions of para 7.6.8 above. 4. The decision whether to invite fresh tenders or to negotiate (and with whom) should be made by the tender accepting authority, based on the recommendations of the TC. Convincing reasons must be recorded by the authority recommending negotiations. The CA should exercise due diligence while accepting a tender, ordering negotiations, or calling for a re-tender, and a definite timeframe should be indicated. 5. Normally, all counter-offers are considered negotiations by other means, and the principles of negotiations should apply to such counter-offers. For example, a counter-offer to L1 to arrive at an acceptable rate shall amount to a negotiation. However, any counter-offer (at the rates accepted by L1) to L2, L3, and so on in case of splitting of quantities (and in parallel Rate Contracts) shall not be deemed to be a negotiation. Similarly, dynamic bids in the Reverse Auction process, as per para 4.5 above, are not to be considered as negotiations. 6. After the CA has decided to call a specific bidder for negotiation, the following procedure should be adopted: a) It must be understood that if the period of validity of the original offer expires before the close of negotiations, the original offer will not be available for acceptance. The period of validity of the original offer must, therefore, be extended, wherever necessary, before negotiations; b) The bidder to be called in for negotiations should be addressed as per the format of the letter laid down in Annexure 15 so that the rates originally quoted by him shall remain open for acceptance in the event of failure of the contemplated negotiation; c) A negotiation meeting should be started only after obtaining a signed declaration from the negotiating supplier as per Annexure 15. d) Revised bids should be obtained in writing from the selected bidders at the end of the negotiations in the format of the letter laid down in Annexure 16. The bidder should not be permitted to change any other condition of his bid other than lowering the price. The revised bids so obtained should be read out to the bidders or their representatives present immediately after completing the negotiations. If necessary, the negotiating party may be given some time to submit its revised offer. In case, however, the selected bidder prefers to send a revised bid instead of being present at the negotiation, the

What This Means

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

Key Points

• •Negotiations are generally discouraged except in specific circumstances.
• •Negotiations are not allowed with bidders who didn't tender or whose bids were rejected.
• •Permissible negotiation scenarios include unreasonable L1 price, suspected cartel formation, and urgent requirements.
• •The tender accepting authority decides on negotiation or re-tendering based on the Tender Committee's recommendations.
• •All counter-offers are considered negotiations, except for splitting quantities at L1 rates and reverse auction bids.

Practical Example

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

Frequently Asked Questions

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