Para 7.4.7 — NONCONSULT_MANUAL

7.4.8. Consideration of Abnormally Low Bids 1. An Abnormally Low Bid (ALB) is one in which the Bid price, in combination with other elements of the Bid, appears so low that it raises material concerns as to the capability of the Bidder to perform the contract at the offered price. Procuring Entity may in such cases seek written clarifications from the Bidder, including detailed price analyses of its Bid price in relation to scope, schedule, allocation of risks and responsibilities, and any other

7.4.7. Reasonableness of Overall Bid Price Received 1. In every recommendation of the TC for an award of contract, it must be declared that the overall bid price recommended is reasonable. If the overall Bid price received is considered abnormally low, action may be taken as per para 7.4.8 2. If the successful bid as per evaluation criteria, is considered to be unreasonably high, then price justification may be called from the bidder. If the price justification is not acceptable, then either negotiations as per para 7.4.10 or reissue of tender for the identical or similar Services as per para 7.4.11 may be considered. In case cartel is suspected action as per para 7.4.9 may be taken. 3. In large value tenders, blind reliance on the cost estimate is not recommended for assessing reasonableness. More than one method of estimation of cost may be used to triangulate a reasonable price.

Chapter 7: Bid Evaluation, and Award of Contract requirements of the bid document. If, after evaluating the price analyses, procuring entity determines that the Bidder has substantially failed to demonstrate its capability to deliver the contract at the offered price, the Procuring Entity may reject the Bid/ Proposal, and evaluate the next higher bidder (and so on), at his/ their own quoted rate (and not by counteroffering rate of ALB), for award of contract. However, it would not be advisable to fix a normative percentage below the estimated cost, which would automatically be considered as an abnormally low bid. Due care should be taken while formulating the specifications at the time of preparation of tender document to have a safeguard against the submission of abnormally low bid from the bidder.

2. In the case of predatory pricing as well, procuring entities may refer to the above consideration of Abnormally Low Bids to assist themselves in finalization of tenders75.

3. No provisions should be kept in the Tender Documents regarding the Additional Security Deposit/ Bank Guarantee (BG) in case of Abnormally Low Bids. Wherever, there are compelling circumstances to ask for Additional Security Deposit/ Bank Guarantee (BG) in case of ALBs, the same should be taken only with the approval of the next higher authority competent to finalise the particular tender, or the Secretary of the Ministry/ Department, whichever is lower76.