Navigating Disputes In Tender Based Construction Contracts: A Legal Quandary

Public procurement contracts, particularly in infrastructure projects are usually awarded through a tender process. This process is typically divided into two stages: the technical stage and the financial stage. Bidders who satisfy the technical qualification criteria proceed to the financial stage, when their financial bids are opened. Bidders who do not qualify the technical criteria are disqualified and their financial bids are not opened. After evaluating the financial bids and other relevant factors in accordance with the tender, the public authority selects the successful bidder (usually L-1), and a Letter of Award ("LOA") is issued. Following the issuance of the LOA, the successful bidder is required to furnish a Performance Bank Guarantee ("PBG") within a specified period and sign a formal contract with the owner/employer. In some cases, especially for large infrastructure projects, the successful bidder is permitted to incorporate a Special Purpose Vehicle ("