13.7The Tendering Process

I would have answered your letter sooner, but you didn’t send one.Goodman Ace, humorist and writer, 1779–1848

The tender structure and its standard contents will be determined by the statutory procurement regime, the rules of the country, and the rules of the city concerned. A few examples of tender documents and draft contracts are included as annexes.

The information contained in an Invitation to Tender will typically include the following:

• A full description of all aspects of the contract envisaged;
• A description of the services that are to be delivered, such as for each route, the route description and terminal arrangements, the timetable and/or frequency of service required at different hours of the day, different days of the week and different times of the year, the fares;
• Minimum guaranteed kilometers (in the case of gross cost contracts);
• The vehicle fleet requirements, such as maximum vehicle age, emission standards, capacity, configurations of doors and seats, accessibility and other features, branding, advertising limitations, etc.;
• Minimum maintenance requirements;
• Minimum quality requirements and performance standards, and how they will be monitored;
• The penalties and bonuses that may apply;
• Contract extension rules;
• Vehicle procurement requirements in course of contract.

The tender may in fact include a copy of the draft VOC contract that has already been legally drafted, which the successful tenderer will be expected to enter into, possibly after some negotiation around the details. The tender needs to set out how the bids will be evaluated—the criteria and the points awarded for relative degrees of satisfying the criteria. The tender can also specify ranges—for example, set the minimum and/or maximum limits for aspects such as quoted fee/kilometer, existing vehicles that will be scrapped, and so on. Criteria will include price, but also factors such as previous track record, safety measures, financial stability, staffing and management, vehicle maintenance policies.

The tender will need to provide for standardized submissions by bidders so that they can be compared with each other accurately. Some tender processes allow tenderers to submit an alternative proposal, as long as the standard proposal is also submitted. The substantive aspect of the submissions needs to be the criteria against which the bid will be evaluated and scored.

The following information is likely to be required by the Invitation to Tender:

• The company’s legal details, financial statements, tax clearance certificate, proof of compliance with relevant laws, etc.;
• Proof that minimum equity requirement is held by the company;
• Experience of vehicle and BRT operation, in the city, the country, and internationally
• Company size, fleet in other operations;
• Financial proposal—total costs and profit margins;
• Management and staffing proposal;
• Vehicle replacement or fleet expansion proposal and financial proposals in this regard;
• Structure and details of parties to the consortium, in case of consortium or joint venture;
• Details of participation in the consortium of existing affected operators;
• Existing vehicles to be scrapped (if this is a requirement of the tender);
• Vehicle procurement and financing proposals.

The bidding process needs to comply with the statutory provisions governing procurement in the city/country concerned. It should also be well advertised to attract as many participants as possible. There should be no perception that any one participant has any inherent advantage over another. The rules and process should be clear and specific enough that misunderstandings are minimized. Dates for submission of bidding documents should be chosen to give a fair opportunity for all.

Tender documents are typically advertised for collection at a central point in the municipality, and tenderers are required to pay a fee to purchase the documentation. Where there has been a prequalification process, the eligible firms need to be notified that tender documents are available for collection. A compulsory briefing is a common feature of tendering processes.

The tender process can be divided into two stages: prequalification and then tendering. The prequalification stage will require firms to submit documentation showing they meet specified criteria. These may include:

• Firms to hold a minimum amount of working capital;
• Firms to be legally incorporated as formal businesses, with submission of various documents including proof of compliance and all relevant laws and regulations including taxation;
• Firms to be of a certain minimum size;
• Firms to demonstrate they have the requisite experience as BRT operators.

Firms that meet the minimum eligibility criteria are then prequalified to submit a tender. Alternatively, the tender evaluation can have a first stage where bids are rejected before detailed evaluation, for noncompliance with minimum criteria. The bids that do not meet these minimum criteria can then be rejected without being subjected to further evaluation.