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CHAPTER 5
BID EVALUATION
The highest price for materials (either fixed or tied to an index) and/or the lowest price for processing may not be the best way to determine the best processor or end market for your materials. There may be other criteria for determining the successful bidder. Some criteria to consider include:
- previous experience in handling type and quantity of material that you are offering;
- how long the company has been processing material or manufacturing product (you may want to set a minimum level of experience
- the company's financial condition;
- the company's response to your bid (do they understand your needs); and
- transportation costs and location of the processor.
Provide potential bidders with your evaluation criteria. If you are weighting the criteria, provide the relative weight of each.
One situation to review carefully is if you receive a bid price that appears to be "too good to be true." If a bidder provides a price that is considerably above the market indices and/or the next highest price, ask some critical questions about the bid:
- Was the price price the result of an error or misunderstanding of the bid?
- How long has the processor or end market been in business? Does the processor have sufficient experience to ensure reliability and financial stability? After analyzing the market, is it reasonable to expect that the processor can make a profit?
- What is the market for the material? How secure is the market? You may ask the processor to provide letters of intent from end markets?
Bids that are out of line with markets and other bidders are risky. If the contractor can not provide the service due to changing market conditions, then the generator may not have a processor to handle their materials.
The bid document may also include performance bonding to limit the risk of a contractor who is not able to provide the needed service.
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