Understanding Procurement Process Session 1.

Handout 1.1
Bid: a tender or an offer in response to an invitation by an organization expressing its
willingness to undertake a specified task at a price.

Bidder: bidder means a person who submits a bid;

Competitive Bidding: Competitive bidding means a procedure leading to the

award of a contract whereby all the interested persons, firms, companies or
organizations may bid for the contract and includes both national competitive bidding
and international competitive bidding;
Contractor: Contractor means a person, consultant, firm, consultant, firm,
company or an organization who undertakes to supply goods, services or works;

Contract: Contract means an agreement enforceable by law;

Corrupt and fraudulent practices: Corrupt and fraudulent practices include the
offering, giving, receiving, or soliciting of anything of value to influence the action of
a public official or the supplier or contractor in the procurement process or in contract
execution to the detriment of the procuring agencies; or misrepresentation of facts in
order to influence a procurement process or the execution of a contract, collusive
practices among bidders (prior to or after bid submission) designed to establish bid
prices at artificial, non-competitive levels and to deprive the procuring agencies of the
benefits of free and open competition and any request for, or solicitation of anything
of value by any public official in the course of the exercise of his duty;

Lowest evaluated bid: Lowest evaluated bid means

i) a bid most closely conforming to evaluation criteria and other conditions

specified in the bidding document; and
ii) having lowest evaluated cost;
Repeat orders: Repeat orders means procurement of the same commodity from the
same source without competition and includes enhancement of contracts;

Supplier: Supplier means a consultant, firm, company or an organization who

undertakes to supply goods, services or works; and

Value for money: Value for money means best returns for each dollar spent in
terms of quality, timeliness, reliability, after sale services, up-grade ability, price,
source, and the combination of whole-life cost and quality to meet the procuring
agencys requirements.

Validity of bid: Validity of bid is the period of process that started from the
submission of Bid document by the Bidders to the Announcement of the Bid Winner.

Solicitation document: It is document developed by the Bidder in responding the

bids requirement, Solicitation document is developed based on the bid document
provided by the Agency.

Audit of Procurement Process Handout 1.1 1/2

Understanding Procurement Process Session 1.1
Bid Bond: It is a letter of clarification issued by a bank to certify that the said bidder
is financially capable to provide the goods or services as said in the Bid
Advertisement. The amount of Bid Bond is certain percent of the value of work.
Usually the Bidder has to pay certain amount to the bank to get mentioned guarantee.

Solicitation Abstract sheet: is a sheet used by the Procurement Committee to

evaluate the Bid. The sheet will show the comparison among bidders, including the
price that each bidder has offered.

Bid bond: also called a guarantee of maintenance of bid; It is a guarantee of payment

in favour of the procuring agency if the bidder that is selected for award fails to sign
the offered contract. In other words, it is a guarantee that the offer will remain
effective for the period stipulated in the contract documents.

Bidding documents: these constitute the set of documents issued by the procuring
agency which establish the object of the bidding (the technical specifications), specify
proposed contract conditions and establish the bidding procedure to be followed. In a
broader sense, this is the group of documents that determines the contractual
conditions to be established between the supplier or contractor and the borrower.

Award: the action taken by the procuring agency, after examining and comparing
bids, through which it: (i) selects the bid that is determined to be substantially
responsive to the bidding documents and is the most advantageous (i.e. the lowest
evaluated bid); and (ii) officially notifies the bidders of the decision as to the award of
the contract. It is the most important stage of the bidding process, since it
accomplishes its main objective, that is, selection of the firm which is to carry out the
works or services or provide the goods that are the object of the bidding. After the
formal announcement of the award decision, the Borrower may not cancel the tender,
except in very special circumstances or where there has been fraud or other forms of
illegality. In effect, the award completes the contract cycle; the offer made by the
bidder is accepted by the procuring agency in making the award.

Bidding: any formal and competitive procurement procedure through which offers
are requested, received, and evaluated for the procurement of goods, works, and
services, and as a consequence of which an award is made to the bidder whose offer is
the most advantageous, i.e., the lowest evaluate bid. Bidding may be competitive
(Public) or limited, and competitive bidding may be international or restricted to the
local market.

Pre-qualification: Pre-qualification is a process whereby suppliers/contractors of

particular goods are assessed against pre-determined criteria and those suppliers who
satisfy the pre-qualification are invited to offer.

Audit of Procurement Process Handout 1.1 2/2