2-34.1 Comparison of Competitive Offers

Comparing competitive offers involves comparing proposed prices received in response to the RFP. The pricing analyst may compare the current price with those proposed in competing offers or offers for the purchase if adequate price competition exists. To determine whether adequate price competition exists, the pricing analyst may examine the following:

• Proposed prices.
• Range of prices offered by competing suppliers.
• Production or performance experience of the suppliers.
• Exceptions taken by any supplier to the specifications or delivery schedule.

Generally, price competition exists if two or more independent and capable suppliers submit priced proposals meeting the RFP requirements. If price competition exists, it is presumed adequate, unless:

• The potential supplier offering the lowest price has such a decided market advantage that it is practically immune from competition.
• The purchase/SCM team determines that the lowest price is not reasonable.

Once adequate price competition is determined to exist, price comparison between proposals should be relatively easy.

When evaluating potential suppliers’ proposals, the pricing analyst should compare not only the price, but also the terms and conditions of the proposal. Often, these terms and conditions will differ with regard to delivery schedule and upgraded technology to the point that a direct comparison between proposals cannot be made. Therefore, the pricing analyst must “level” the proposals to meet the basic requirements of the RFP to ensure that the price evaluation is performed on proposals with comparable terms and conditions. This may be accomplished by removing additional or upgraded services or components from the overall proposal and proposed price so that the price evaluation can be made only with regard to the terms and conditions explicitly stated in the RFP.