Is the lowest bid the best offer?
Because of the objections very often raised, which has by now become routine in bids for the public and semi-public sector for services offered, tenders continue to place a condition that “the award is based on the lowest bid.”
Thus, and without considering the knowhow, experience and history of the tenderer, the tender awarded goes to the cheapest. This may not be wrong, but is it in the public interest? So, we end up with a system where whatever the experience of a tenderer, outsourcing work to our own area of property development or real estate, all kinds of bids are submitted with a difference range from EUR 1,000 up to 5,000.
This huge difference, as an indication, especially in cases that result in the courts, such as expropriation, feasibility studies, etc., the recipient is obliged under the terms of the offer to go to the cheapest.
In a recent case, the difference from our bid of EUR 3,500 to the successful bidder (one-man office with a history of two years) was a mere 300 euros. The case eventually ended up in court, where we as defendants appeared on behalf of the owner and our colleague represented the expropriation authority. The outcome is still pending, but in courts, apart from expert and scientific knowledge, a huge part of the argument is based on impression the witness will give the court. So if there is no relevant experience and the defendant’s presentation is successful, it is understood that this will be against the public interest.
Of course we’re not to say that anyone who has no experience should be rejected, but a basic professional experience (depending on the severity of the case) is necessary. This reminds me of the notorious assessment of the premium property opposite Hilton hotel (for the Qatari project) where we submitted a bid (and won) for EUR 5,000, while the other bidders put in for 20,000. Our office was accused of all sort of things, to which was added the comment the technical chamber ETEK that “there should be a minimum level for fees” etc. So, I now ask ETEK – where has “the cheapest” rule gone? Do they adopt or reject it at will?
Perhaps, the best way is for tenders to first consider the basis of experience and knowhow, and at the second stage to opt for the cheapest bid. Looking to find the most suitable solution, the regulations for tenders are not feasible because the Tenders Council will raise objections. In the case of the Qatar investment, and to the credit of then president Demetris Christofias who was harshly critical of the system, the whole deal was up in the air because of oppositions and delay surrounding the issue. The other party may have failed to convince the Tender Board, but on the other who paid for the whole delay? The whole deal may have eventually gone belly up for other reasons, but imagine what would happen if we had all been in agreement and the transaction failed because of our own appeals and objections process.
Another case with similar tenders was assigned to two agencies for the estimation of a property held by a public organisation for which a four-page presentation was submitted, but without supporting evidence after which our office (the most expensive bidder) was assigned to assess the two previous reports, which took us almost 1 1/2 month and a report of around 30 pages – naturally, the number pages certainly does not make sense if the content is not of relevant quality. In the past, we have also been assigned environmental impact studies which are often dished out in a haphazard way, to which ETEK (here we agree with them) argued that the quality of the reports should seriously be taken into consideration.
This is where we need ETEK to stand firm in its interventions to the state or public services and a system where the non-runner up tenderer would indeed have the right to protest, but not to stop the whole procedure that would cause further unnecessary delays. The problem is particularly obvious in architectural competitions where work stops because of these procedures (such as the Paphos marina case).
The growth of the Cyprus economy and the implementation of such projects should be the primary goal, especially in view of the current economic situation and perhaps a change should be introduced in the law to award the lowest tenderer some form of compensation if the cheapest bid was initially disqualified for other valid reasons. It is not fair that the process is constantly one-sided to the detriment of the state. Further education in all matters is necessary. However, the recent comment by Transport and Communications Minister Marios Demetriades regarding the new project for a national museum in Nicosia was the worst.
Asked how the cost of the project will be reduced from EUR 70 mln to 50 mln, as estimated by quantity surveyors, he was completely negative undermining the profession, while to the question of who will undertake the task in the planning and oversight stage, up until the final tender is awarded, and if someone will monitor or follow up on the decision, he had no response.
So, this project is crucial project of monumental importance for tourism and revenue inflow to the capital, will probably never be implemented unless there are changes in attitudes or otherwise.