Chapter 6 -
Soliciting and awarding bids

When you write a specification, prepare a bid that includes a detailed description of the vehicle and its components. Make sure the bid addresses all of your expectations: performance, operating costs, projected maintenance costs for the life of the vehicle and warranties (both expressed and implied).

Consider the following factors when you initiate a bid:

• Warranty terms. Define your expectations. Outline claim procedures as manual or automated processes, so that time frames can be quantified for settlement.
• Latent defects. These defects are failures due to defective materials or poor workmanship by the manufacturer. Each state quantifies latent-defect periods — usually four years from date of acceptance. A period exceeding the statutory limits should be defined for vendors that have been problematic in the past.
• Liquidated damages. If the manufacturer does not support the warranty or fails to correct defects identified at delivery, the cost of correcting these faults can be deducted from the final payment. Establish a period for correcting faults. A liquidated-damages clause, accepted before issuing the vehicle order, gives you leverage to ensure that the vehicle is complete before final payment.

The written specification, because of its detail and the manufacturer’s capability to meet the required detail precisely, requires some clarification. Explanations and discussions may be required before manufacturers respond. The companies bidding for the vehicle assembly can more exactly meet your needs if they fully understand the requirements.

In addition to specifications, the bid process should include your expectations about delivery times, assembly sequence, chassis-body and mounted-equipment assembly timetables (if applicable), warranties, penalties, latent-defect qualifications and payment terms. Include other standard purchasing criteria and terms, along with the date, time and desired format for returned quotes.

Solicit bids from as many firms as possible. If you have selected a specific brand, solicit bids from several dealers that offer the brand. A highly competitive environment gives you the best bargaining position.

The bids should require line-item pricing for each component. This practice allows you to compare competing bids on an item-by-item basis. You also can delete items, if necessary, to reduce costs.

Evaluating bids
Evaluating bids for awards and delivery is a detailed process that should be defined, prioritized and performed annually. Doing your homework helps you make purchase decisions with confidence.

If you have prepared a functional specification, evaluate the bids for best value. Lowest price is the critical factor only for a technical specification.

Evaluate functional bids for technical accuracy and for the respondents’ reliability and ability to support their products in future use. Also consider the respondents’ facilities, materials, process, personnel and historical product performance. Now is a good time to check references to better gauge a manufacturer’s ability to deliver the promise.
A functional bid evaluation has three components:

• Technical. Does the vehicle perform? Does it conform to the written specification?
• Quality. Does the bidder support vehicles previously supplied? Is the vendor in good financial health?
• Price. The lowest price receives the highest mark.

The goal is to integrate the subjective information into an objective decision so that you purchase the vehicle that offers the best value.

Managing the award process
With the technical, quality and price evaluations in hand for a functional specification, you can prioritize the bids. Offer the business to the vendor that provides the best value. The best-qualified bidder should meet with you to discuss each line item, verifying the cost. Any discrepancies and questions should be addressed during this discussion. Verify delivery times, penalties and support services at this time. If the first vendor does not provide clear technical, quality and price information, call the second or third vendor. You must be satisfied that the quote meets your specifications.

When you are satisfied with the proposals, officially award the bid to the best-qualified vendor. For a technical specification, the lowest price is the sole factor that determines the award.

In Summary
When soliciting bids, make sure your specifications address all of your expectations: performance, operating costs, projected maintenance costs for the life of the vehicle and warranties (both expressed and implied). Solicit bids from as many firms as possible. If you have selected a specific brand, solicit bids from several dealers that offer the brand. A highly competitive environment gives you the best bargaining position. Evaluate bids for technical accuracy and for the respondents’ reliability and ability to support their products in future use. Award the bid to the best-qualified — or in the case of a technical specification, lowest-priced — vendor.