PWD Vol-2, Chapter-9, Step 7 Page 9-19

Step 7. Award of Contract

Step 7.1 Pre-Award Discussions and Letter of Acceptance

After approval of the recommendation of the Bid Evaluation Committee, the Employer may issue the Letter of Acceptance (LOA) to the lowest evaluated responsive bidder without further delay if there is no need to clarify any points in the bid. Alternatively, the Employer may require discussions with the lowest evaluated bidder in order to agree on any deviations which may have arisen before issuing the LOA. The discussions should be recorded and the minutes attached to the LOA.

If agreement with the lowest evaluated responsive bidder cannot be reached then normal course of action will be for the bid security of the bidder to be forfeited and for the Employer to seek agreement with the second lowest evaluated bidder under FAR Rule 77(3).

In case of second lowest evaluated responsive bidder also failing to conclude the agreement, his bid security shall also be forfeited under FAR Rule 77(3).

If the bid price of third lowest evaluated responsive bid does not exceed the amount of the lowest evaluated bid and the amount of Bid Securities forfeited from first and second lowest bidders, the contract may be awarded to the third lowest bidder with the recommendations of the Bid Evaluation Committee under FAR Rule 77(3).

If the agreement does not take place with the third lowest bidder, his Bid Security shall be forfeited and bids shall be re-invited under FAR Rule 77(3).

The Bid Security of all bidders except the three bidders quoting the lowest bids may be released or returned under FAR Rule 77(4).

Step 7.2 Provision of Performance Security

The bidding documents normally provide 14 days from the date of issuance of the LOA by the Employer for the submission of the Performance Security. If the bidder fails to furnish the Performance Security and sign the contract, the Bid Security shall be forfeited. And second lowest evaluated responsive bidder shall be awarded the contract. Upon submission of the Performance Security, by the second lowest bidder, a contract shall be concluded with this bidder under FAR Rule 77(3).

Step 7.3 Contract Agreement

The Project Manager shall ensure that all provisions in the bidding documents and any additional provisions agreed upon with the bidder are complied with before signing the Agreement.
The issuing of a LOA in Step 7.1 is normally considered sufficient to establish a legally binding contract, with the implementing agency as the Employer and the successful bidder as the Contractor. The Employer may issue a letter instructing the Contractor to commence work, in advance of the signing of the Agreement provided that the Contractor has submitted the necessary securities and insurances. Construction administration procedures from this point are described in Chapter 11.

Step 7.4 Notification to Unsuccessful Bidders
Upon acceptance of a bid, a comparative table of the bids shall be prepared and flashed stating names and addresses of the bidders, amount of corrected total bid prices and quoted bid prices and the rationales (basis) of acceptance of the bid.

PPA 2007; Chapter 3, Section 27, and 47

27. Acceptance of Bid and Procurement Contract:

(1) The Public Entity shall select for acceptance only the lowest evaluated substantially responsive bid in accordance with Section 25.

(2) Within seven days of the selection of the bid pursuant to Sub-section (1), the Public Entity shall serve a notice of the intent of acceptance of his or her bid to the concerned bidder. Information regarding the name, address of the bidder whose bid has been so selected and the price of the bid shall also be communicated to the other bidders.

(3) If no bidder makes an application pursuant to Section 47 within a period of seven days of providing the notice under Sub-section (2), the bid of the bidder selected pursuant to Sub-section (1) shall be accepted and a notice shall be communicated to the bidder to furnish the performance security to conclude the procurement contract within fifteen days.

(4) The concerned bidder shall have to furnish the performance security and sign the procurement contract under Section 52 within the period set forth in Sub-section (3).

(5) If the bidder fails to furnish the performance security and sign the procurement contract within the period under Sub-section (3), the bid security of that bidder shall be forfeited, and the bid of the other immediately next lowest evaluated substantially responsive bidder shall be accepted and the procurement contract concluded.

(6) If even the bidder under Sub-section (5) fails to furnish the performance security and sign the procurement contract, the bid of the other immediately next lowest evaluated substantially responsive bidder, respectively, shall be accepted, and a notice shall be served to that bidder for concluding the procurement contract pursuant to this Section.

(7) If, within thirty days of the communication of the notice as referred to in Sub-section (2), any bidder whose bid has been rejected requests for grounds for the rejection of its bid, the Public Entity shall have to communicate such information to that bidder.

PPR 2007, Chapter 11,Rule 110.

110. Performance Security to be Furnished for conclusion of Contract:

(1) A bidder whose bid is accepted shall, while submitting performance security pursuant to Sub-section (4) of Section 27 of the Act, submit the performance security issued by a commercial bank in the format as specified in the bidding documents within the time specified under Sub-section (3) of Section 27 of the Act

(2) The amount of the performance security under Sub-section (1) shall be five percent of the procurement contract amount.

(3) In the case of a procurement contract which does not disclose the amount pursuant to Sub-section (2), the performance security shall be submitted as stipulated in the bidding documents by the Public Entity

(4) Except otherwise provided in the procurement contract, the validity period of the performance security under Sub-rule (1) shall exceed at least by the period of one month beyond the last period for supply or delivery of the goods or the period of warranty or the period of defects liability of construction works as referred to in such contract.

(5) The performance security issued by a foreign bank shall be valid only if it is counter-guaranteed by a commercial bank established in Nepal.