PROCUREMENT
Testing the logic of the bid scoring process South Africa’s price-laden bid scoring process is meant to yield a fair and competitive result that promotes transformation. However, when the formulae used are tested using hypothetical examples, the opposite result could intentionally or unintentionally be achieved. The fact that a linear approach is taken further complicates the problem. By Gundo Maswime*
T
he allocation of points for bid price in South Africa is based on the following formulae:
Where: Ps = Points scored for price of tender under consideration Pt = Rand value of offered tender consideration Pmin = Rand value of lowest acceptable tender
There are certain particularities or oddities about these formulae that require a sober reflection by both service providers and policymakers alike. Using the second formula (2), the point is illustrated using arbitrary bidders. Let’s assume three bidders submit bids for a road construction project as per Table 1. Keeping the bid ranks as they are, let’s introduce a fourth bidder, Gamma Pty at R20 million, and observe the effect of this new bid on the other bids – see Table 2. What is immediately obvious is that the introduction of Gamma Pty has suddenly made Theta Pty the preferred bidder even though neither the quality of their bid nor their bid price have changed. This characteristic of the formula means that every time the bid
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adjudication committee refers a report back to the bid evaluation committee for an excluded bidder to be included in the evaluation, all the other bids must be re-evaluated if the ‘added’ bidder submitted a price lower than all evaluated bidders. This oddity built into the price scoring formula raises questions about the concept of value for money. If the other offers never changed, it makes the concept of value for money a mirage. This concept of value for money is called ‘cost-effectiveness’ in section 217 (1) of the Constitution of the Republic of South Africa. It is a constitutional requirement for the procurement system to meet.
Value for money versus lowest price What this example emphatically puts across is
