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Most users ever online was 32 on Fri Mar 08, 2013 10:22 pm

Limit of Reduction of Quantities in the Negotiation Process

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Re: Limit of Reduction of Quantities in the Negotiation Process

Post  RJM on Mon Mar 21, 2011 10:22 pm

The typical clause which RSM is referring is reproduced below for reference.

38. Procuring Entities Right to Vary Quantities at the Time of Award

38.1 The Procuring Entity reserves the right at the time of contract award to increase or decrease the quantity of goods or related services originally specified in these Bidding documents (schedule of requirements) provided this does not exceed by the percentage indicated in the Bid Data Sheet, without any change in unit price or other terms and conditions of the Bid and Bidding documents.

Percentage for quantities increase or decrease is (insert percentage) [This should not exceed 15 percent] - Bid Data Sheet.


First Dimension of the Issue Posted by the YOUR VIEWS:

RSM, the clause reproduced above to me this is a privilege clause which gives unilateral right to PE to increase or decrease goods or related services at time of contract award and I do not think this right is subject to negotiation.
Moreover, I do not see any connection to this clause and negotiation clause provided in most, if not all Standard Bidding Documents issued by PPRA as one clause is all about “unilateral right to vary quantities” and other is all about “negotiation”.

RSM, from your submission one may take a view that the negotiations to held for purpose of reducing quantities for budgetary reasons it is direct linked to the unilateral right PEs are given to vary quantities at the time of award. If this is the case then the reduction of quantities cannot exceed 15%.

RSM, the question is, can these two clauses “Negotiation” and “PEs Right to Vary Quantities at the Time of Award” linked and interpreted together as provided in the Instruction to Bidders in most of Standard Bidding Documents?

Second Dimension

YOUR VIEWS wrote

[2] Can PEs reducing the quantities by 50% or more?

If I consider myself as the lowest evaluated bidder negotiating whereby PE intend to reduce the quantities for budgetary reasons – one question will be clicking in my head is to what extent my profit and overhead costs are affected by the reduction? In situation whereby the client is intending to reduce quantities by 50% definitely business elements [profit and overhead costs] will suffer considerably – chance of agreeing such reduction is minimal. To me not all reductions will be favorable to the bidder –even that not exceeding 15% could be disputed.

RJM

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Re: Limit of Reduction of Quantities in the Negotiation Process

Post  RSM on Thu Mar 17, 2011 11:47 am

YOUR VIEWS

My understanding is that the Standard Bidding Documents provides for quantity increase or reduction of up to 15%.

This is interesting, can we actually reduce quantities up to 50% because of budgetary contraints? Does not this reflect on poor estimating and budgeting?

RSM

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Limit of Reduction of Quantities in the Negotiation Process

Post  YOUR VIEWS on Wed Mar 16, 2011 7:22 pm

One of the parameters Procuring Entities are allowed to negotiate as R95(1)/97/2005 is the reduction of quantities for budgetary reasons. My concerns are as follows:-

[1] Is there any limit of reduction or PEs can reduce the quantities as their budget allow?
[2] Can PEs reducing the quantities by 50% or more?

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