Evaluated Bids – Sometimes valid, sometimes rigged….

In the past few months I have bid two projects that each used a 20-year Present Worth calculation

to evaluate and select the winning bids. For one of the projects I think it was a reasonable evaluation criterion where two different technologies were being compared, one with high capital and low operating costs and other the opposite. In this case it was a fair way to evaluate the bids.

For the other project however, this evaluation was a farce where bids were for a pre-designed RO system, including pre-selected membranes. The equipment manufacturers were also preselected. Assuming the preselection process for the manufacturers ensured that bidders had the capability and experience to build the specified equipment to the high quality required, and they were all bidding to build exactly the same piece of equipment, what was the point of doing an evaluated bid?

Where membranes have been preselected (and everyone is using the same projection program) and system arrays, recoveries and pumps are tightly specified, how could there be any difference in energy consumption, antiscalant dose and membrane replacement cost, which are the major operating cost inputs for a present worth calculation? Manufacturers will likely vary in their estimates in membrane cleaning and replacement frequencies because that is almost totally dependent on how well the owner operates the system and any pretreatment – so this is at best an educated guess, assuming optimum operating conditions and hoping for the best.

When everyone is bidding to build the same piece of equipment, operating cost comparisons should not be used to compare bids. If there is concern about the quality of an OEM’s equipment and the subsequent impact on operating costs, this should be dealt with in the prequalification phase through checking references, etc., so that the OEMs are vetted at this point. The reality for this particular project is that the evaluated bid process was used so that the owner and/or engineer had the ability to subjectively use the numbers to select their preferred OEM. A claimed membrane replacement frequency that was 2 years longer than the other OEMs brought this higher capital cost bidder’s 20-year present worth back to the other bidders and allowed subsequent selection. Note that OEMs were not required to back up their nominated replacement frequency with a pro-rated warranty for this period so other than using this number to decide the winning bidder, it was worthless to the end user.

I am not saying evaluated bids should not be used for RO/NF systems. In cases where the system design is not finalized and OEMs are given latitude to provide a system that will meet a performance specification, that opens up the potential for innovation and variations in factors that impact operating costs, system footprint, recovery rates, etc. where a 20-year PW evaluation is very valid. But when everyone is bidding to build the same piece of equipment, if the engineer or owner wants a way to award to a certain OEM they should accomplish this through the pre-qualification phase rather than waste a lot of OEM’s time through the bidding process.