Contract Bidding
What is a contract
A contract is a agreement between two parties enforced at a law, the agreement use to be under conditions of law.
We study contract as for all the projects in construction we work through contracts.
To make an agreement we require certain factors given below.
Formation of a contract
- Object - The objective of the work we are going to perform
- Proposal / Offer - The proposal we are going to make, such as the amount amount of project, terms etc.
- Acceptance - How the acceptance procedure be carried out.
- Consideration - What all the qualifications and requirements will be considered.
- Reciprocal promise - Part of the consideration for each other or both parties client and contractor.
Bidding document
The documents help in obtaining uniformity of knowledge as both the parties have the same set of information. Some buyers clarify in their Instructions to Bidders the names of all the documents which are part of the bidding documents. With the help of the bidding document, both the buyer and the seller know the things which going to affect the rights and obligations.
If later a person brings a random document as an evidence , than the document will not be valid document since it was not a part while bidding process.
Clarification of bidding documents:
A bidder (the party offering to buy an asset from a seller) has to decide whether he or she will answer questions being asked by the contractors. These questions can be about the delivery schedule, specifications, or some conditions of contract.
If in any case a bidder feels the question asked is not legit, or a waste of time than he can choose not to answer it. Because of not answering there can be many effects too such as - He can loose contractors, can loose high bids.
Even if a bidder answers the questions of contractors he can review his contract and can modify it if needed. These modifications can be of specifications, requirements and conditions of contract.
There contractor (buyer) have full rights to put the bid just before the amendment time provided by the bidder.
Clarifications and clauses in bids
1) Language of the bid
For private and domestic, it is not a very important clause but for bids coming from international market, the clause is important since there will be many problems in translation of bid to the buyer.
2) Bid form and price schedule
These instructions help both the buyer and suppliers know the entire obligations of either side and their cost.
3) Bid currencies
The bid currencies are how the bids in different currencies will get converted into the domestic currency. In these case the bidder (buyer) may ask to bid in his own currency which may lead to bear more money to supplier for risk of exchange rate variations.
4) Bidder's qualifications
A buyer can give the contract randomly to any person, so to overcome the problem the buyer provides certain qualification criteria so as to avoid waste of time and money in.
The criteria falls under three conditions such as
- Financial competence - Many firms are not able to complete the work for big orders due to low financial conditions
- Technical competence - A firm without technical competence would have difficulty in producing goods that meet the desired specifications.
- Production capabilities- Based on the capabilities of the production of the suppliers.
5) Bid security
The bid security is for the ease of bidders as it makes the suppliers bid on the contract only if they are genuinely interested in making a bid. Because for bidding the supplier has to put some amount make it as 10% for security which will be returned after a time period of opening the contract or if a person refuses to make a contract after winning the amount can be fortified.
6) Signatures on bids
The law of contract recognizes a contract between legally competent parties only. Therefor minors are not competent in joining contracts. But they can join with joint ventures for which there are many laws for Laws of partnership.
7) Secrecy of bids
Opening the bids before closing dates is against secrecy of the bids, so care is been taken and bids are open after the closing date only.
8) Deadline for submission for bids
Bidders state the last date for receiving bids. He cannot keep taking the bids whenever he wants.
The submission for bids can relate to the validity period of the bid.
But if a buyer feels the provided stipulated time is not sufficient for the sellers to preapre but documents, than he has right to extend the deadline of the bid.
9) Withdrawal of bids
Bidders can withdraw or remove the bid for changes before the deadline of submission date only.
If he withdraw after opening the bid than the bidder has right to fortify it.
10) Bid opening and evaluation
- At the bid opening ceremony, Bidders or there representatives are invited and should be present.
- At the bid opening, a buyer use to announce all the major details of bids such as bid price, discounts offered, If the bid security is there or not, etc.
- The public opening of bids are made still confidence in the bidding process; otherwise, there are chances of other suppliers to decline the bid.
11) Comprehensive Evaluation
Bids found substantively responsive are then put in a tabular form to show their comparative position. Based on taxes and duties, insurance cost , cost of spares etc
11) Award of contract
- Acceptance of the bid results in a binding contract.
- The bidder, whose bid gets accepted, are asked to sign a contract to make it formalize about the acceptance of the offer.
The preparation of bid document should consists of all the factors which may lead to least conflicts so observing and considering everything the tender has to be prepared.
METHODS OF BIDDING
The bidding process is been done in 5 processes such as
- Single-stage Single-envelope
- Single-stage Two-envelope
- Two stage Single envelope
- Two-stage Two-envelope.
- Pre-qualification.
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