Competitive Price Proposals

Competitive Price Proposals

 

Chapter 11 describes the conditions that should be satisfied before competitive bidding is used as means of selecting the source of supply. When this approach is employed and the following additional conditions are satisfied, the resulting low bid normally provides a fair and reasonable price:

 

  • ·        At least two qualified sources have responded to the solicitation.
  • ·        The proposals are responsive to the buying firm’s requirements.
  • ·        The supplier competed independently for the award.
  • ·        The supplier submitting the lowest offer does not have an unfair advantage over its competitors.
  • ·        The lowest evaluated price is reasonable.

The buyer cannot apply this approach to pricing in a mechanical manner. He or she clearly must use common sense and ensure that the price is reasonable compared with past prices, independent estimates, or realistic rules of thumb.