Queries
When we call for tenders for manpower, vendors charge just Re 0.01 per person as administrative charge so as to win the contract. Can this be taken as predatory bidding? Can the bid be rejected legally? It is feared that the vendor will then charge the engaged persons out of the money paid by the client to them.
If there are government guidelines on this (in India), kindly link them.
Thanks.

14th August 2017 From India, Ghaziabad

PARTICIPATING IN DISCUSSION:
Dinesh Divekar
Business Mentor, Consultant And Trainer
Aniket Pathak
Sr. Officer Hr
Memberp
Recruitment
+1 Other

Dear Member P,

The bid for the contract has to be seen from the following context:

a) You are keeping people on contractor's roll and paying salary exactly as per the minimum wages
b) You are keeping people on contractor's roll where salary is well above the minimum wages

In case (a) there is no scope for a contractor to get profit margin. However, he might be supplying the manpower since manpower supplied is less compared with (b)

In case (b), as per the bid, contractor does not have profit margin however, he could be taking money from the employees that he hires them. He could take his cut and then pass on the remainder to the employees.

In either context, you may ask price break up of his bid to the contractor. Ask clarification with the admin charges of Re 0.01, how will he be sustain continuity of the operations.

By the way, are going to take security deposit from the contractor? If yes, will you link the refund of the security deposit to the disruptions of his services?

Thanks,

Dinesh Divekar
14th August 2017 From India, Bangalore
Thanks for the quick reply.
You have hit the issue right. However, the problem that the vendor has created is that he is undercutting others by charging 1 paisa. The one paisa thing came to notice when all bidders were asked to give the break up. Since government does not allow asking further questions after opening of financial bids, he will have to be given the contract because others have asked much more administrative charges beyond the mandatory minimum wages, contributions and taxes. This vendor has done this trick since the tender had categorically said that 'NIL' charges by vendor will not be accepted.
Are there any government orders/ vigilance circulars/ competition commission guidelines that might have come to your notice, which allow the client to reject a bid where service charges are not 'NIL' but unsustainably low.
14th August 2017 From India, Ghaziabad
Dear P,

As an honest citizen your concern is appreciated, but due to fear of government circulars i.e. CVC guidelines the tender mechanism points to choose the lowest bidder. But the CVC guidelines do not prohibit to seek clarifications or make negotiation provided some benefit accrues to the Govt. However, in order to stop such practice we have to devise a procedure before floating a tender, as to what will be the minimum percentage of administrative charges for manpower tenders. If any bidder quotes lower than the pre-decided minimum percentage, the same shall be rejected. Such a procedure should be pre-approved by the Competent Authority.

Regards
C.M. Lal Srivastava

09818680671
17th August 2017 From India, New Delhi
Dear Sir,
There is no issue if the bidder is asking for 0.1 paisa. But as a principal employer you are accountable for the payment of minimum wages to contractual workers. if you are paying only minimum wages to the contractor there is a possibility that he will pay less to workers. you have to monitor that.
18th August 2017 From India, Pune
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