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Para 4.3.1 - Least Cost Selection | KartavyaDesk

Non-Consultancy Manual

Original Rule Text

4.3.1. Price based System - Least Cost Selection (LCS) 1. In this method of selection, service providers submit both a technical proposal and a financial proposal at the same time. Minimum qualifying marks for the quality of the technical proposal are prescribed as a benchmark (normally 75 (seventy-five) out of a maximum of 100 (hundred)) and indicated in the Tender Document along with a scheme for allotting marks for various technical criteria/ attributes. Alternatively, since in LCS selection, technical offers do not require to be ranked (or to be added of weighted technical score to financial score – as in QCBS selection), it would suffice in appropriately simple cases if the evaluation criteria is only a fail/ pass criteria prescribing only the minimum qualifying benchmark. Thus, in LCS, simplified evaluation criteria may also be used where instead of a marking scheme, a minimum fail/pass benchmark of technical evaluation may be prescribed (i.e. must have completed at least two similar assignments; must have a turnover of at least Rs 10 (Rupees Ten) Crore etc). Any bidder that passes these benchmarks is declared as technically qualified for the opening of their financial bids. The technical proposals are opened first and evaluated, and the offers that qualify as per these technical evaluation criteria will only be considered as technically responsive, and the rest

What This Means

Para 4.3.1 of the Manual for Procurement of Non-Consultancy Services describes the Least Cost Selection (LCS) method. This is a way the government chooses a service provider when the main goal is to get the lowest price. In LCS, companies submit both technical and financial proposals at the same time. The government first checks the technical proposals to make sure they meet a minimum standard. This standard can be a scoring system (like getting at least 75 out of 100 points) or a simple pass/fail based on certain requirements (like having completed a certain number of similar projects or having a minimum turnover).

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

Key Points

  • •LCS focuses on selecting the lowest-priced technically qualified bidder.
  • •Bidders submit both technical and financial proposals simultaneously.
  • •Technical proposals are evaluated against a pre-defined benchmark (either a scoring system or a pass/fail criteria).
  • •Only technically qualified bidders' financial proposals are considered.
  • •Simplified evaluation criteria (pass/fail) can be used in appropriately simple cases.

Practical Example

The Ministry of Jal Shakti needs to hire a company to maintain the cleanliness of its office buildings. They decide to use LCS. The tender document specifies that bidders must have at least 5 years of experience in facility management and a minimum annual turnover of ₹5 Crore. Three companies, 'Swachh Bharat Services', 'Clean India Solutions', and 'Nirmal Abhiyan Pvt Ltd', submit bids. 'Swachh Bharat Services' and 'Clean India Solutions' meet the technical criteria. 'Nirmal Abhiyan Pvt Ltd' only has 3 years of experience, so their financial bid is not opened. The financial bids of 'Swachh Bharat Services' and 'Clean India Solutions' are then opened, and the contract is awarded to the company with the lowest price.

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

Frequently Asked Questions

What happens if no bidder meets the minimum technical requirements?▼
If no bidder meets the minimum technical requirements, the tender may need to be re-evaluated, the technical requirements may need to be revised, or the tender may need to be re-issued.
Is LCS suitable for all types of non-consultancy services?▼
No. LCS is most suitable when the service is well-defined, and quality can be ensured through clear technical specifications. It is less suitable when quality is highly subjective or requires specialized expertise.
What is the difference between LCS and QCBS?▼
LCS (Least Cost Selection) focuses solely on the lowest price among technically qualified bidders. QCBS (Quality and Cost Based Selection) considers both the quality (technical score) and cost (financial score) of the proposals, giving weightage to both factors.
Can the minimum qualifying marks for the technical proposal be changed after the tender is issued?▼
Generally, no. The minimum qualifying marks should be clearly defined in the tender document and should not be changed after the tender is issued to maintain fairness and transparency.
What if two bidders have the same lowest price after being technically qualified?▼
The tender document should specify the tie-breaking procedure in such cases. Common methods include drawing lots or requesting the bidders to submit revised financial bids.

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

According to Para 4.3.1 of the Manual for Procurement of Non-Consultancy Services, what is the primary focus of the Least Cost Selection (LCS) method?

Related Rules

Para 3.2Manual for Procurement of Non-Consultancy Services, 2025 - Para 3.2 - Chapter 3Para 4.1.1Manual for Procurement of Non-Consultancy Services, 2025 - Para 4.1.1 - Chapter 3Para 4.2.3Manual for Procurement of Non-Consultancy Services, 2025 - Para 4.2.3 - Chapter 3Para 4.4Manual for Procurement of Non-Consultancy Services, 2025 - Para 4.4 - Chapter 3Para 6.8Manual for Procurement of Non-Consultancy Services, 2025 - Para 6.8 - Chapter 6

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