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Process | Glossary

L1 (Lowest bidder)

The technically qualified bidder with the lowest evaluated price. Most government works and supply contracts are awarded to L1.

How L1 is decided

In a two-bid tender, technical bids are opened first and evaluated against the eligibility and technical criteria. Only the bidders who qualify have their financial bids opened. The lowest evaluated price is L1, the next L2, and so on.

'Evaluated' matters: the comparison follows the tender's rules, for example total of item rates times quantities in an item-rate BOQ, or the percentage above or below the estimate in a percentage-rate tender, sometimes with loading for deviations or taxes.

When L1 does not win

The buyer may negotiate with L1, cancel and re-tender if L1 is far above the estimate, or ask L1 to justify an abnormally low bid. Under the MSE procurement policy, an MSE within 15% of L1 may be allowed to match L1's price for a share of the order in goods and services tenders. Consultancy contracts often use quality-and-cost based selection (QCBS) instead of pure L1.

Frequently Asked Questions

Are L1 prices published?
Portals publish financial bid opening results (the bid opening summary) after opening; that is where L1, L2 and their amounts appear.
Can L1 be rejected?
Yes, if the price is unreasonable or abnormally low, or if L1 fails to submit documents or performance security after award.
What is L1 in GeM?
The same idea: the lowest priced technically qualified offer, which may be followed by a reverse auction if the bid specifies one.

Related Terms

Two-bid system (technical and financial bid)

Bids in two covers: a technical bid (eligibility documents and compliance) opened first, and a financial bid opened only for bidders who qualify technically.

BOQ (Bill of Quantities)

The itemised list of the work's items with units and quantities, against which bidders quote rates. On e-procurement portals it is an Excel file filled in and uploaded as the financial bid.

MSE benefits in tenders

Under the Public Procurement Policy for Micro and Small Enterprises, registered MSEs get free tender documents, EMD exemption and a purchase preference in central procurement of goods and services.

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