Procurement — possible ways to justify for single bid

👋 Hello folks~

We’re pretty sure most of us have encountered this at least once — the organisation requires several items to perform a task, but these items are not available internally and have to be purchased. As the total value of these items is quite substantial, you cannot purchase them off the shelves and have to procure via bidding using your company’s purchasing portal.

Before we can publicly open the invitation to bid, these two important steps need to be performed:

1. solicit for the potential suppliers, and
2. ensure the to-be-published specifications are not restrictive such that only one supplier can meet the requirements

Yet, there is still a possible scenario of receiving only one bid when the invitation is closed. Without the competitors’ price comparisons, the only option is to show some forms of cost and/or price reasonableness analysis — by showing that the single bid’s quoted price(s) is fair and reasonable.

Cool, but how?

Cost-reasonableness analysis examines the item’s cost to ensure the pricing is reasonable, while price-reasonableness analysis compares the offered price (the total price) to ensure it is fair commercially. Both methods may be required to be computed for the single bid.

Some of the common cost/price reasonableness analysis techniques are:

• Past Purchase Price
  e.g. the previous bid’s awarded price(s) of similar items
• Market Purchase Price
  e.g. the published market price(s) of competitors with similar items
• Reference Price from other department’s purchase price
• Proposed Price obtained through solicitation

Using any of the above sources, their pricing can be compared against the single bid’s quoted pricing to show a fair comparison amongst them.

For better view and clarity, it is preferable that the similar items’ prices are placed side by side in a table format (see below):

If the single bid’s quoted pricing is the lowest, it is beneficial to compute the cost savings to enforce the award.

In the evaluation report, it will be advisable to document the reasons why the other potential suppliers did not bid. This is to show that market sensing was performed, and the competition was adequate. In addition, if the single bid’s supplier has been awarded with other contracts with the organisation, it is advantageous to add in such information in the report. Other forms of official information like good feedback of this supplier can be included. This will increase the management’s confidence in this supplier’s ability to deliver goods/services.

We hope the above pointers help you to overcome the “headache” of how to award the single bid and enable your evaluation report scores well with your organisation. 😀

🧙🏼‍♀Team Merlin 💛
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