High Speed Rail: How Your Bid Is Graded Against Others

High Speed Rail: How Your Bid Is Graded Against Others

By Wirot Poonsuwan

The total contract price is the selection criteria. Barring exceptional circumstances, the lowest bidder will likely become the successful winner in the e-bidding for each of the four civil construction contracts connecting sections of the 253-kilometer northeastern high-speed rail first phase from Bangkok to Nakhon Ratchasima. All the qualified bids, based on the medium prices totaling 38 billion baht or USD 1.2 billion, due for submission Monday, August 26, will be evaluated on technical aspects to determine their passing scores before a final decision is made by the project owner to select the winner, relying on the most crucial criterion: pricing.

Methods of Construction, Highest Weight for Technical

A full score of 100 is allocated to five technical categories of a bid:

  • A schedule of compliance with specifications: 10 of 100;
  • Management, quality control and construction plans: 20 of 100;
  • Personnel, including personnel allocation plans, manufacturers, suppliers and subcontractors: 20 of 100;
  • Machinery, equipment and tools: 10 of 100; and
  • Methods of construction constitute the technical category that is given the most weight by the project owner. Understandably, this category expands to cover such challenging components as work methods on soil, connecting structures and foundation structures, steps and methods for building bridges, steps and methods for constructing elevated tracks and elevated roadways crossing railways, steps and methods for building railway tracks, work methods for piling and work methods for tunneling (for the 12-kilometer tunnel between Muag Lek and Lum Takhong): 40 of 100.

A bidder will pass the technical evaluation when it obtains at least 60% of each of the above category. For example, in category one, a schedule of compliance with specifications, it must get at least 6 points from the full score of 10.

Altogether of the five categories, that bidder must get no less than 75% of the total score to pass the technical evaluation.

By way of illustration, the passing bidder must get the minimum of 6 points in category one, 17 points in category two, 15 points in category, 7 points in category four and 30 points in category five, amounting to 75%.

Unit Price Contracts

The passing bidders compete on prices. After all the bidders have been cut down to a shortlist of bidders who have passed the technical evaluation, these passing bidders will be compared by the project owner’s selection committee on the total prices they propose to perform their contract. The lowest bidder generally wins.

Prices proposed must include the value added tax and all other taxes and expenses and must be uploaded in the form prescribed by the project owner, an electronic format to be completely filled in by each bidder when submitting the e-bidding. These are unit-price contracts, with rates for units of labor, materials and equipment spelled out and added up to show a total price in a bill of quantities (BOQ).

The BOQ must also show a profit to be derived from the contract.

Each bidder is expected to propose its price in Thai baht only once, limited to only one price. In other words, if you happen to know that one other bidder has sent in a lower price, you cannot change your mind to discount your bid to beat that other bidder.

Past Experiences from Parent Company Cannot Be Used

Submitted electronically with the BOQ is a bid bond valued at 5% of the medium contract price. The bid bonds will be returned to those who don’t win the bid within two weeks after the bid result is announced. The top three candidates’ bid bonds, however, will be retained until the construction contract is signed.

Even though the bidding announcement does not state expressly, it goes without saying that past experience of each member of the bidding consortium to be filed electronically must belong to that member. The bidder cannot capitalize on past experiences of its parent company overseas.

The technical proposal part of the bid substantiating the five technical categories outlined above must be submitted physically, practically in large volumes of documents transported in cardboard boxes or luggage with wheels, on a day 0+1, i.e. one business day—no later than 3:00 p.m.—after the bidder files its electronic bid. The schedule is strictly enforced and has been a major issue of dispute in previous megaprojects.

Allow two hours of travel time from anywhere in Bangkok; you can never predict traffic levels in the city, an ideal automotive world of free trade, where hundreds of thousands of new cars are released onto the streets each month.

Legal Effects of Owner’s Disclaimer

Every bid announcement by a Thai government project owner will contain a disclaimer whereby the owner reserves its right, without prejudice, not to award the contract to the lowest bidder. Without prejudice is an attempt by the project owner to bar the lowest bidder from claiming damages in connection with the decision by the owner not to select it as the winner.

Such a disclaimer is not sacred and is not always valid and enforceable if the project owner does not act properly in making its decision. An arbitrary denial of the lowest bidder’s right to be awarded the contract without good reasons can expose the project owner to lawsuits under Thai law, despite the disclaimer.

The owner will be deemed to act properly, for instance, in the case under which it is proven that the winner is involved in bid rigging for the e-bidding.

Simply put, if the lowest bidder is found by the selection committee to have committed an act that obstructs a fair competition on this transaction, the lowest bidder can be disqualified and the contract awarded to the second lowest bidder.

Foreign Bid Rigging Does Not Count

Only bid rigging for this particular e-bidding matters. The selection committee will strike out the names of the bid riggers from the list of bidders and the project owner will formally punish the riggers as work abandoners, prohibited from bidding for government work for two years—the compulsory ban under the procurement regulation.

Compared to multilateral financial institutions such as the World Bank, Thailand is realistic when it comes to engaging international contractors to help develop its infrastructure through a set of less stringent rules of law.

As long as a bidder is not labeled as a work abandoner by any local government agency or state enterprise, allegations of bid rigging and anti-competition behavior in other transactions or in other countries will not disqualify the bidder from participating in the e-bidding and winning it.

Wirot Poonsuwan is Senior Counsel and Head of Special Projects at Bangkok law firm Blumenthal Richter & Sumet and can be contacted at wirot@brslawyers.com.

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