Abstract:

This research paper scrutinizes the ramifications and concerns related to the traditional Tendering practice of awarding tenders to the lowest bidder. The article initially outlines the perceived benefits of this Tendering method, such as cost-effectiveness and straightforward decision-making. However, the main emphasis is placed on the associated concerns and unintended consequences that may arise. Under the heading "Cost vs. Quality Trade-off," the paper exposes the potential threat to the quality of goods or services as providers may cut corners to offer the lowest price. The section "Implications for Fair Competition" deliberates how this practice may discourage small and medium enterprises from bidding, thus potentially reducing market competition. "Risk of Unsustainability" section examines the longterm economic risks, like the possible bankruptcy of suppliers/ service providers who cannot maintain a business model built on low bids. In "Strategic Underbidding and Post-Award Cost Escalation," we discuss the manipulation tactics of certain contractors who secure the tender with a low bid only to inflate the costs post-award. The article concludes by proposing alternatives to the lowest-bidder award system, suggesting mechanisms such as best value procurement /services, where cost, quality, and supplier/ contractor capability are all taken into account. Our findings underscore the need for tendering reform that prioritizes long-term value and sustainable practices over short-term financial gain

Description:

procurement strategies, lowest-bidder approach, sustainable procurement.