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Awarding contracts to lowest bidder is not always the best

By Nashon Okowa | September 21st 2019 at 12:00:00 GMT +0300

“As I hurtled through space, one thought kept crossing my mind - every part of this rocket was supplied by the lowest bidder.” John Glenn.

Has this ever happened to you? That nearly all government facilities you use were done by the lowest tenderer. Take a careful look next time if you could notice something different. Ideally, it shouldn’t even be a bother to anyone if the right procedure to arrive at the lowest bidder is well articulated and followed. But mostly the procedures are explicit but rarely adhered to; especially on government projects. 

The bitterness of poor quality remains long after the sweetness of low price is forgotten is a saying I reckon should be well displayed in all government procurement offices. We have placed too much emphasis on awarding contracts to the lowest bidder in the tendering process subconsciously though, I may say. It so seems that we have diluted the entire bidding chain and singularly reduced it merely one thing – lowest bid. The Public Procurement and Asset Disposal Act 2015 that guides government tender and award process seems also skewed towards this direction. In the determination of the successful tender, the act lays the first emphasis on the lowest bidder. It says in clause 86 (1) “The successful tender shall be the one who meets any one of the following as specified in the tender document— (a) the tender with the lowest evaluated price;” 

As a result we have created a contractor generation, at the cheer of procurement officers that is mindful of nothing other than being the lowest bidder. The guarded ethos of maintaining work quality is out through the window. We have molded ‘lowest bidder contractors’ in our country and painfully paying the price for it. During tendering whether private or public-but mostly public-the competition for tender is now solely to be the lowest bidder. Some would challenge this assertion that they are other requirements weighted before looking at the prices.

True, but outside the mandatory requirements, which is basic to have for any company to be even registered by-laws of this land, the rest are purely subjective. In light of this, we have arrived at a junction where a contractor would rather underprice to get a job then seek to make profits through other means.

The contractor would then be on the hunt for cheaper materials to substitute where he can get away with it, likely leaving the client with an inferior product. And since it would be impossible to maintain standards and make profits, quality of work falls and contractor becomes more eager to engage in legal battles to recover their ‘losses.’ Coupled with huge appetite for quick money by most procurement officers, public projects have been left to fate. Sadly.

This explains the constant poor work quality and delays on government projects. Nearly all contractors that bid for work now under-cut costs in order to be the lowest bidder. Suffice to say that it isn’t even safe anymore to award the highest bidder. Everyone is on the low level and regardless of who is awarded the project is jinxed for failure from the onset. We must quickly change this mentality, especially in our public sector projects.

For the umpteen time; a low tender price which does not cover a contractor’s costs will normally lead to the contractor seeking other ways, such as claims and disputes, to recover additional costs.

We need to make it mandatory for the tender evaluation committees to carry out due diligence report on a contractor who submits the lowest evaluated responsive bid. At the moment it is just an option in the procurement Act. Also, we must quickly change the mentality of our contractors, being the lowest bidder is good but it cannot be at the expense of quality comprise.

- The writer is chairman of Association of Construction Managers of Kenya. [email protected]

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