Purpose of the Quotation Evaluation:
The purpose of evaluation and comparison of offers is to determine which vendor has the lowest price for acceptable specifications (as requested) and conditions of supply
Factors to Consider in Quotation Evaluation
In determining whether an offer is acceptable, non-price factors, such as those listed below are taken into account with the lowest acceptable offer ultimately being selected.
- Compliance with technical specifications, relevant international standards and technical norms.
- Compatibility with existing equipment and standardisation plans.
- Compliance with required delivery schedules.
- Examination / comparison of samples.
- Payment terms.
- Guarantees, availability of spare parts, after-sales services and training.
- Life-cycle aspects covering maintenance and operating costs.
- Capability, capacity, financial standing, past experience and performance of the vendor and its local representative.
Method of Evaluation of Bidding Quotations:
All information pertaining to quotations must be treated as highly confidential and must not under any circumstances be disclosed to other bidders. Prior to evaluating quotations, the evaluation criteria should be agreed ie, price, minimum delivery timeframe, acceptable payment terms etc.
However please note that in respect of ITT processes, it is strongly advised to publically announce certain information, such as supplier name and financial bid, during the tender opening session and this should be clearly stated in the tender advertisement and dossier.
When using a Request for Quotation Procedure, the evaluation of quotations should be recorded using a Quotation Evaluation Form (QEF) (See appendix 3). If financial thresholds and corresponding procurement procedures similar to those suggested in chapter 4 are applied, purchases of supplies between Rs 15,000 and Rs 999,000 will be evaluated using a QEF by the purchaser (or relevant logistics staff member). In this scenario however, 3 signatures should appear on the QEF as purchase committee members. In addition to the purchaser (or equivalent) recommending the most appropriate vendor, and one representative each from finance & programs the person who authorised the original SR (or someone delegated by them), should sign all the bids (which must be opened in the presence of the committee) and the form thereby giving ultimate authorisation for the procurement to proceed with the recommended supplier. The authoriser of the SR is often the budget holder of the item being procured. Requiring this person to authorise the QEF therefore provides forewarning of the exact amount which will ultimately be deducted from their budget.
As the SR contains an estimated cost for the requested materials/services, instances can arise whereby the actual costs stated on a QEF can be higher than those authorised on an SR. This is one of the reasons why the authoriser of the SR should also authorise the QEF. It may however occur that the actual costs quoted on a QEF are above the authorisation limit of the person who authorised the SR. In this scenario, an appropriate person with a higher authorisation limit should approve the QEF.
Where multiple related items have being requested on a single SR (such as vehicle spare parts for example), quotation evaluation can be a difficult process as typically no one supplier will offer the best price for each and every item. Individual unit prices may be discounted by suppliers on the basis of quotations being considered as a single order. In such scenarios therefore, the total value of each quotation should be evaluated rather than individual unit costs. However, when it seems that individual line items have highly inflated prices these should be investigated in case there is an error in the quotation or the item has been unfairly inflated in price by a supplier.
When SR’s are received by the procurement function for supplies or services which have been initially purchased within the previous month, orders up to 15% of the original purchase or services can be made on the basis of the existing quotations without the need for additional quotes. Quotations should therefore be considered valid for 30 days assuming that prices and conditions quoted are still valid.