Para 4.3.2 — NONCONSULT_MANUAL

4.3.2. Quality and Cost Based Selection (QCBS) 1. In the QCBS system of selection, both the quality of the proposal and the cost of the services are considered as deciding factors. This approach is employed when the quality of deliverables is crucial, but the cost of service or work cannot be ignored. 2. Quality/ Technical scores are assigned to proposals based on specified quality criteria. Minimum qualifying marks (normally 70-80 (seventy – eighty) out of a maximum of 100 (hundred) marks) as a benchmark for the quality of the technical proposal is prescribed, and proposals below this benchmark are not considered for Financial evaluation. The

Chapter 4: Bidding Design for Non-Consultancy Services Financial Proposals are also given cost-score based on the relative ranking of prices, with 100 (hundred) marks for the lowest and pro-rated lower marks for higher priced offers. The total score shall be obtained by weighting the quality and cost scores and adding them. For example, the weightage given to the cost score may be 80% (Eighty percent), and the technical score may be given a weightage of 20% (twenty percent but should never be more than 30%), etc. However, the weight for the “quality” shall be chosen, considering the complexity of the assignment and the relative importance of quality. The proposed weightings for quality and cost shall be specified in the RfP. The firm obtaining the highest total score shall be selected. It may be noted that theoretically QCBS system with weight of 100% (hundred percent) for the ‘cost’ approximates the price based LCS system. This method of selection shall be used for highly technically complex and critical assignments where it is justifiable to pay appropriately higher price for higher quality of proposal.

3. Procuring entities are allowed 38 to use QCBS for procurement of works and nonconsultancy services in the following cases. In this para 4.3.2, instructions containing “shall” are mandatory; any deviation from these instructions shall require relaxation from the Ministry of Finance (for Ministries/ Departments, etc.) or (from the Board of Directors for CPSEs):

a) where the procurement has been declared to be a Quality Oriented Procurement (QOP) by the competent authority or b) for procurement of Non-Consulting Services, where estimated value of procurement (including all taxes and option clause) does not exceed Rs 10 crore, this method of selection shall be used for highly technically complex and critical assignments where it is justifiable to pay appropriately higher price for higher quality of proposal. c) QCBS shall not be used in the procurements planned to be done through Reverse Auction or through Limited tenders.

Notes: In cases where the estimated value was less than Rs 10 crore, but on tendering, following the QCBS process, it is proposed to place a contract for more than Rs 10 crore, the following procedure shall be adopted:

i) In case the difference between estimated value (including taxes etc as above) and value of the proposed contract (including taxes etc) is less than 10% of the estimated value, there will be no bar on placement of contract. ii) In all other cases, the procurement process is to be scrapped and restarted either as QOP or on a non-QCBS basis.

4. The principles of QCBS shall be as provided in Rule 192(i), (ii), and

(iii) of the GFR (Please refer to Manual for Procurement of Consultancy services for such principles). However, the maximum weight of the non-financial parameters shall in no case exceed 30%. 5. The Competent Authority: the Competent Authority for allowing the QCBS method in the procurement of works/ NC Services shall be as follows:- a) For declaring a procurement as QOP: i) 39Where the procuring entity/ project executing authority is covered by Rule 1 of GFR: 1) Secretary of the Ministry/ Department to which the procuring entity belongs or 2) Secretary of Public Authority40 with the concurrence of the procuring entity/ project executing authority41 or

Note: Procuring entity/ project executing authority will themselves decide the level at which such concurrence is to be given. Such concurrence need not be obtained at the level of Secretary in charge of Procuring entity/ project executing authority.

3) Where the public authority is any Indian Institute of Technology (IIT) or Indian Institute of Science (IISc), Director of such IIT/ IISc (This provision is applicable for Procurement declared as Q.O.P. on or before 31.03.2027 and will be reviewed thereafter). ii) Where the procuring entity is a CPSE, the Board of Directors of the CPSE. iii) In case the authority to approve procurement on a nomination basis is lower than the Secretary of the Ministry/ Department (or Board of Directors in case of CPSEs), such authority will also be competent to approve the procurement as QOP.

b) For Non-consulting Services not exceeding Rs. 10 crores in value: i) Where the procuring entity/project executing authority is covered by Rule 1 of GFR (i.e., Central Government Ministries/Departments, attached/ subordinate bodies, and Autonomous Bodies (except those Autonomous Bodies with separate Financial Rules approved by the Government)), by the officer or authority two levels above the officer/ authority competent to finalise the particular procurement, or the Secretary of the Ministry/ Department whichever is lower. ii) Where the procuring entity is a CPSE, the authority or officer two levels above the officer competent to finalise the particular procurement or the Board of Directors of the CPSE, whichever is lower.

39 As amended by OM No.F.1 /1/2021-PPD dtd 08/03/2024 40 “Public Authority” means the client organization, which may be asking a “Procuring Entity” or “Project Executing Authority” or “Project Executing Agency” to execute a project or work on their behalf. For example, in case a University executes the works through Central Public Works Department (CPWD), then the said university will be the public authority, and CPWD will be the Procuring Entity or Project Executing Authority or Project Executing Agency. (The public authority and the project executing authority may also be the same.) 41 “Procuring Entity” or “Project Executing Authority” or “Project Executing Agency” means Central Government Ministries/ Departments, Attached/ Subordinate bodies including Autonomous Bodies or Central Public Sector Enterprises (CPSEs) (etc) executing projects/ works.

6. Special Technical Committee (STC): a) In all cases of QOP, a Special Technical Committee (STC) shall be constituted with the following composition:- i) Two or more persons who have expert knowledge and/or long experience relevant to the procurement in question; ii) One or more persons with extensive experience in handling public projects and/or public finance in the Government or State/Central Public Sector;

Chapter 4: Bidding Design for Non-Consultancy Services iii) One or more persons with experience in financial management/ financial administration/audit/accountancy; iv) Not more than one member representing the procuring entity who may inter alia provide administrative support to the Committee. v) Any person who is a member of the STC shall not associate himself in any manner with any bidder for the procurement concerned. b) The names of members of the Special Technical Committee shall be decided either by the Competent Authority specified in sub-para 5) above or by any other authority to whom such power is delegated by the competent authority; however, powers shall not be delegated to the officer or authority competent to finalise the particular procurement. Sitting fee may be paid to the members of the STC. Incidental costs including travel shall be paid by the procuring entity. c) The STC shall make specific recommendations on the following matters:- i) The weight to be given to non-financial parameters (not exceeding 30%). However, the weight for the “technical” shall be chosen, considering the complexity of the assignment and the relative importance of quality. The proposed weightings for quality and cost shall be specified in the Tender Document. It may be noted that theoretically QCBS system with weight of 100% (hundred percent) for the ‘cost’ is same as the price based LCS system. ii) The specific quality/ technical parameters, their weights, their scoring methodology, the minimum qualification score, etc. and other relevant criteria necessary for ensuring fair and transparent quality/ technical evaluation of the bids. d) The recommendations of the STC shall be followed except where there are special grounds in public interest for deviating from them. However, every case of deviation from the recommendations of the STC shall require approval of the Competent Authority specified in sub-para 5) above who approved the declaration of the procurement as QOP. e) With respect to QCBS for Non-Consultancy Services not exceeding Rs.10 crore, a Technical Committee shall be constituted to carry out functions mentioned in sub-para c) above in lieu of the STC. The composition of the Technical Committee shall follow the provisions of sub-para a) above. 7. Grounds for Declaring a Procurement to be Quality Oriented Procurement: A procurement should be declared as a QOP only if there is enough justification in terms of value addition or enhancement of delivery or paramount importance of quality. Reasons for not adopting two cover/ pre-qualification-based/ least cost system shall be documented. 8. Tender Documents - Fixing/ Selection of the Evaluation/ Qualification Criteria: To ensure quality, some of the criteria used in marking may be made mandatory and if a bidder does not meet those, then bids shall not be evaluated further. Weightage may also be given for the timely completion of past projects of a similar nature by the bidder. 9. Pre-bid Meeting: In all cases of QOP, a pre-bid meeting shall be held in which the technical criteria including the marking scheme shall be discussed with the potential bidders. If any changes in the criteria are necessitated by such consultation, such changes shall require the recommendation of the STC. In Non-Consultancy Services, pre-bid meetings may be held at the discretion of the public authority. 10. Fixing of Scoring/ Marking Criteria:

a) The scoring should not be a variable that relies on the subjective opinion of the evaluating panel. The marking scheme should enable the achievement of almost similar scores irrespective of the persons/ experts involved in the evaluation process. When the outcomes are consistent with the available information, the QCBS parameters are more reliable. Unambiguous descriptions and criteria help to avoid grey areas so as to ensure that there is only one possible score for the item. As far as possible, the criteria should be so specific and clear that bidders can self-mark their own bids. b) It is better to specify minimum marks for meeting the qualifying criteria specified. In QCBS selection, minimum qualifying marks (normally 70-80 (seventy – eighty) out of a maximum of 100 (hundred) marks) as qualifying benchmark for the quality of the technical proposal shall be prescribed and indicated in the Tender Document along with a scheme for allotting marks for various technical criteria/ attributes. Bids scoring less than the minimum threshold shall not be considered for further evaluation. Since the weightage of the cost element adopted in NC services is as high as 70 (seventy) percent, financial considerations would dominate the selection, though to a lower extent as compared to LCS (Least Cost Selection – L1 basis). In such cases, it is essential to ensure that the minimum qualifying benchmark in the technical evaluation is set sufficiently high to weed out low-quality bids with low prices. c) Examples of fixed quality parameters that ought not to be considered for relative scoring include organisations’ ISO/ standards’ accreditation, etc. These are required to establish the credentials of the service provider but cannot be used for relative comparison between various bidders. d) Bidders should be asked to produce certificates for the past performance. A format may be given in the tender itself outlining the contract details, completion, sustainability of service, etc, and bidders may be asked to fill it and give evidence to that effect. e) Bidders may be asked to submit a detailed presentation on their proposals in the form of soft copy along with the bid so as to facilitate better understanding of their proposal and to ensure commitment. f) Besides the Bill of Quantity (BOQ) output criteria for payment, Key Performance Indicators (KPIs) may be specified with minimum achievement levels for payment so as to ensure quality compliance.

Evaluation of QCBS Bids: Please refer to para 7.4.4 for evaluation of QCBS bids 12. Caution against consortium/ JV in QCBS Procurements:

a) Since quality is given weightage in the evaluation itself, in QCBS procurement, therefore, Joint Ventures may be avoided, as far as possible. Joint Ventures could, however, become necessary in high technology or innovative projects where a single entity may not be able to execute the work alone. b) If consortiums/ JVs are allowed, measures should be taken to ensure that all the consortium/ JV partners are present and deliver services all through the contract period. An Implementation Board with the participation of all consortium/ JV partners may be provided for wherein the Project Manager from the procuring entity shall also be allowed an audience when required. Meeting of consortium/ JV partners with the project executing authority for quarterly progress review may be made as a criterion linked to the achievement of key dates or even payment.

Risk Mitigation a) Inappropriate Selection of QCBS: There is a possibility that the QCBS system is selected where LCS or other systems would have been more appropriate considering the quality requirements or the capability of the Procuring Entity to monitor the assignment. The selection of QCBS should be justified and applied only under the circumstances mentioned above. b) Weightage of Technical: Cost may not be proportional to quality requirements Maximum weightage different from 30:70 (Thirty:Seventy) for technical to financial weightage, should be adequately examined and justified. c) Technical criteria may not be relevant to the realisation of the quality of the assignment. Technical criteria selected should be relevant and proportional to the requirement of quality of assignment, and the selection process should be rigorous enough to ensure that, on the one hand, no technically unsatisfactory bids should be able to get past a loose criterion and, on the other hand, no technically satisfactory offer should get ruled out by tight criteria. d) Marking Subjectivity: The scheme of marking or its application may be subjective. It is important to lay down as objective a scheme of marking as possible. Cases where subjectivity is unavoidable (as in evaluation of methodology etc), a system of grading responses and their marking may be laid down in the bidding documents. The procuring Entity should also have a system of conciliation and moderation of widely disparate markings by different members of the evaluation committee.

13. QCBS - Risks and Mitigations: Chapter 4: Bidding Design for Non-Consultancy Services