The Department of Expenditure has introduced a new threshold to identify abnormally low bids in government procurement.
The finance ministry has directed government agencies to examine any bid that quotes a price exceeding 30 per cent lower than the project's estimated cost, according to reports by The Times of India and Business Standard.
The Department of Expenditure has classified these offers as Abnormally Low Bids (ALBs). The new rules aim to prevent issues regarding project quality and timely completion by checking if such low offers are actually viable.
Under the new framework, procuring entities must ask bidders for written explanations and detailed price analyses if they have concerns about the bidder's ability to finish the work. The agency will then evaluate if the quoted amount is enough to meet all contract requirements.
The department clarified that hitting this 30 per cent threshold does not result in the automatic rejection of a bid. Bidders will have the chance to demonstrate how they plan to execute the contract at that specific rate.
If a bidder cannot prove they can complete the work at the offered price, the agency may reject the bid. In such instances, the agency can look at the next highest bidder, provided their price is deemed reasonable.
Previously, procurement rules lacked a specific numerical limit for identifying ALBs, leaving the decision to the discretion of individual agencies. The revised guidelines are intended to increase transparency and uniformity across the procurement process.
