Belt Auction

Are public companies legally obligated to take the best offer when bidding out a project?

Do public companies have any obligation to get the best price for services being bid out through their procurement Dept. For example the CEO's brother sells bolts for $3 but a competitor who particpated in a RFP sells them for $2. Does the publicly traded company have to use the other vendor? Thank You very much

Public Comments

1. They have an ethical obligation to take the best qualified offer. The vendor must show that he will be able to furnish the product or service in a quantity and quality demanded during the term to the contract. A vendor may be disqualified if he is not established, reliable, or has any overhanging clouds.
2. Government or public procurements are not solely about price. In the UK the Office for Goverment Commerce (OGC) has guidelines about public procurement and says that the public purse is looking for "value for money". Which is why of course when writing a proposal that your should demonstrate value, not just have a low price. This is how they define it: Value for money is the primary driver for public procurement. It usually means buying the product or service with the lowest whole life costs that is ‘fit for purpose’ and meets specification. Where an item is chosen that does not have the lowest whole life costs, then the additional ‘value added’ benefit must be clear and justifiable. This means delivering the following priorities: • When considering suitable procurement options and developing your business case, VFM should always be assessed over the whole life of the contract. This should include disposal (either sale proceeds or decommissioning costs) and take into account all costs and benefits to society as a whole including the environmental and social benefits and costs, not simply those directly relevant to the purchaser. • Assessment of supplier bids should only be conducted in relation to a published set of evaluation criteria, which must be relevant to the subject of the contract, and any ‘added value’ that justifies a higher price must flow from these defined criteria and be assessed from the perspective of the contracting authority. • Affordability should be considered; clearly, goods or services that are unaffordable cannot be bought. This should be addressed as soon as possible within the process, ideally at the business case stage before procurement commences. In order to address this issue, a change in procurement approach, specification or business strategy may be required. • VFM should normally be established through the competitive process. A strong competition from a vibrant market will generally deliver a VFM outcome. But where competition is limited, or even absent, other routes may have to be used to establish VFM (market creation activity would help avoid this problem for future procurements).