Time to Move beyond Lowest Bidding:
By KK Kapila
It is time for the government to move away from the outdated practice of lowest bidding (L1) in public procurement and adopt the globally accepted Quality-cum-Cost-Based Selection (QCBS) method. This transition is particularly critical for infrastructure-related departments, as already envisaged in the General Financial Rules issued by the Ministry of Finance.
Public procurement, especially in infrastructure projects, demands a careful balance between cost efficiency and quality outcomes. Traditionally, many government departments have relied on awarding contracts to the lowest bidder. While this approach may appear economical in the short term, it often leads to significant long-term challenges.
The most critical drawback of the L1 system is the compromise on quality. Contractors quoting the lowest price frequently cut corners in materials, technology, or workmanship. This results in substandard infrastructure that fails prematurely, leading to higher lifecycle costs due to frequent repairs, maintenance, or even complete replacement.
Moreover, the lowest bid often excludes essential components such as installation, maintenance, or after-sales support. These hidden costs emerge later, eroding any initial savings and placing an additional financial burden on government agencies.
Another concern is the reliability of bidders. Extremely low bids are often submitted by firms lacking sufficient experience or capacity. Such contractors may struggle to meet project requirements, causing delays, disputes, and increased administrative oversight.
In addition, the L1 approach tends to focus on immediate cost savings rather than long-term value. This results in a cycle of repeated procurement and inconsistent project outcomes, ultimately increasing overall expenditure.
The Quality-cum-Cost-Based Selection (QCBS) method offers a more balanced and sustainable approach. Under QCBS, contracts are awarded based on a combination of technical quality and financial cost, ensuring that both competence and competitiveness are taken into account.
This method prioritises proven expertise, innovation, and reliability alongside reasonable pricing. As a result, it leads to better project execution, improved durability of assets, and reduced lifecycle costs.
QCBS also streamlines procurement processes by incorporating structured evaluation frameworks. This reduces administrative complexity and enables government agencies to focus on efficient project delivery.
Importantly, QCBS encourages the adoption of modern technologies and best practices, ensuring that public infrastructure keeps pace with global standards.
A significant step in this direction has already been taken by the Ministry of Road Transport and Highways (MoRTH), which recently issued a circular introducing a structured framework for evaluating contractors and concessionaires engaged in National Highway projects. This framework assigns scores across multiple performance parameters, enhancing transparency, accountability, and quality assurance.
Such progressive measures should now be extended across other key sectors, including railways, power, ports, and airports.
The adoption of QCBS is no longer optional—it is an imperative. All government ministries and departments must urgently implement this method in line with the General Financial Rules.
A decisive shift to QCBS will ensure, Higher quality infrastructure, Greater accountability in execution, Improved lifecycle value for public investments, Reduced long-term costs. The government must issue clear and immediate directions to institutionalise QCBS across all infrastructure projects. This reform will not only address persistent quality challenges but also align India’s procurement practices with global standards.
(KK Kapila is President Emeritus, International Road Federation & Chairman, ICT, a global Infrastructure consultant company and past president, Consulting Engineers Association of India (CEAI).)
