Re: When a Consultant Offer US$ 0 in Financial Proposal

**RSM** Wed Mar 30, 2011 1:03 pm

RJM

You wrote

RSM, I think you miss something from the submission of YOUR VIEWS that the selection method was Quality and Cost Based Selection and formula was given AND I confined by myself on the issue under discussion.

I new that the method of selection was QCBS and that is why I said

What if it was a methodology like least cost comparison, quality based or even fixed budget where you do not compute combined score?

In your submission you have responded to my concern, the issue is not that you can not insert 0 in the formula, the issue is that there is no consideration and therefore you can not proceed to compute the combined score.

**RJM** Thu Mar 24, 2011 11:10 pm

RSM wrote

However I disagree with second point that 0 can not be applied in the comparison formula. What if it was a methodology like least cost comparison, quality based or even fixed budget where you do not compute combined score?

RSM, I think you miss something from the submission of YOUR VIEWS that the selection method was Quality and Cost Based Selection and formula was given AND I confined by myself on the issue under discussion.

If selection method was either quality based, least cost or fixed budget one need to analysis.

1. Quality Based Selection – since Firm B scored highest among others his financial proposal will be opened first and result USD$0 – as you have concurred with me above- NO CONSIDERATION = NO CONTRACT.

2. Least cost comparison – it is obvious his offer “in the eyes of many it will be lowest” but no contract can be concluded in case - NO CONSIDERATION = NO CONTRACT.

3. Fixed Budget – Since Firm B scored highest among others AND mathematically the offer is within the budget and lowest BUT again no contract be can concluded - - NO CONSIDERATION = NO CONTRACT.

RSM, Now that it is apparent that QCBS was deployed in this case, if we are to apply the offer in the formula how should we proceed?

**RSM** Thu Mar 24, 2011 10:14 pm

RJM

I tend to concur with your first point - if there is no consideration - then there is no possibility of forming a contract.

However I disagree with second point that 0 can not be applied in the comparison formula. What if it was a methodology like least cost comparison, quality based or even fixed budget where you do not compute combined score?

**RJM** Mon Mar 21, 2011 10:56 pm

This is interesting!

I think there are two dimensions we should focus:-

1.One of the fundamental elements in forming a valid contract is CONSIREDARATION.

For an offer and acceptance to form a contract there must be consideration. Consideration is defined as 'some right, benefit or profit accruing to the promissor, detriment, loss or otherwise responsibility suffered by the promissee'. What this means is that the party trying to enforce the contract must have 'paid' something in exchange for the promise of the other party. Consideration must be of real value, but it does not have to be money. It can take the form of money, physical objects, services, promised actions, abstinence from a future action, and much more. IS THERE ANY CONSIDERATION FROM FIRM B?

2.The applicability of the offer [USD$0] offered by Firm B in the comparison of other offers using the formula provided. To me the offer of US$ 0 does not allow freely application of the formula especially in converting the financial figures into financial score in order to combine technical and financial scores.

YOUR VIEWS Fri Mar 18, 2011 10:46 pm

RSM + FORUM MEMEBERS,

We have just received clarification from FIRM B. They have confirmed that their offer is US$0 as indicated in the Financial Proposal Submission Form.

RSM your assumption was right!

**RSM** Thu Mar 17, 2011 11:16 pm

YOUR VIEWS

Lets wait until you get the clarification.

Other forum members

For the sake of keeping this dialogue going, let us assume that the consultants will say that indeed their financial proposal is 0 US Dollars. What advise do we give YOUR VIEWS?

YOUR VIEWS Thu Mar 17, 2011 1:36 pm

RSM, this is true case and not hypothetical. Even the Tender Board is in dilemma how can a consultant charge nothing for carrying out the assignment? Financial Submission Form [Form of Tender] indicated US$0. Do we need to seek clarification on the offer? I think after clarification you can now contribute effectively?

Let us keep the ball rolling.

**RSM** Thu Mar 17, 2011 11:52 am

YOUR VIEWS

Is this a hypothetical or true case? How can a Consultant charge nothing for carrying out the assignment?

Logic tells me before deciding, a clarification should be sought from the Consultant on import of their financial submission.

YOUR VIEWS Wed Mar 16, 2011 7:09 pm

One Procuring Entity advertised the tender for Provision of Consultancy Services and in the said tender has two phases of which they are interdependent i.e. phase one must be completed prior commencing phase two. The consultants were required to submit proposals for the two phases separate and evaluation will be done by phase. After shortlist four firms submitted proposals and three firms scored above minimum pass mark as result their financial proposals were opening publicly. The following were recorded in the opening ceremony for phase one assignment:-

Firm A – Technical Score 85%
Staff Remuneration US$ 280,000
Reimbursable Expenses US$ 80,000
Total US$ 360,000

Firm B – Technical Score 86%
Staff Remuneration US$ 0
Reimbursable Expenses US$ 0
Total US$ 0

Firm C – Technical Score 82%
Staff Remuneration US$ 320,000
Reimbursable Expenses US$ 70,000
Total US$ 390,000

Evaluation Process – Combined Technical and Financial Proposals

The Evaluation Committee [EC] carried out a combined technical and financial proposals for three firms; A, B & C. As result firm B emerged as a winner who indicated that they will charge nothing [US$ 0] for the assignment.
In order to apply the formula stipulated in the RFP document for conversion of financial figures into financial scores, EC changed the offer of firm B from US$ 0 to US$ 1 – “Otherwise applying “0” in the formula could have make mathematical expression impossible and meaningless” – Mathematicians can help.

I think the formula is familiar to us!

Sf = 100 x Fm/F
Sf = the financial score
Fm = the lowest price
F = price of the proposal under consideration

When the report was submitted to Tender Board for adjudication, TB was in dilemma whether to go on award the contract to firm B or not? Most of them took the view that there is something finish is going on.

What is your take on this?

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