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Beware of the Low Bidder

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Contracting has many challenges, one of which is overcoming the skewed effects of low bidders. I have experienced numerous consumers get enticed by a low bid coming across their desk to only end up with tremendous disappointment. With budgets very limited over the past few years, many people strongly consider low bids for projects when they historically would have thrown them out as outliers. There are normally undesirable reasons why someone would submit a bid that is so much lower than other bidders.

When bid specifications are written properly, a potential customer should expect that the valid bids will be within 5-15% of each other, possibly 20% at the most. When low bidders deliver their prices that are significantly lower than the rest of the bidders, it is unwise to assume they have included the desirable solution and somehow figured out how to do it so much cheaper than everyone else. It isn’t required for customers to be experts in statistics to understand means and standard deviations for them to understand the irony of accepting a bid that is so much lower than the rest.

Some reasons for low bidders to submit pricing that is so skewed are mistakes, cheap or undesirable deliverables (which open the door for change orders), and “buying” the project, which translates to doing it at little or no profit. Each of these lead to significant problems for the customer if they choose the low bidder’s proposal. The old saying that, “you get what you pay for” definitely is relevant when customers decide on trusting bidders that come in significantly lower than their competitors.

Please join us next week here at The O when we discuss some more of the pitfalls of low bidders.

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Sean Crain is founder and CEO of Orion Security Solutions (OSS). Prior to starting OSS, Sean spent over eight years with the U.S. Department of State as a Diplomatic Security Service (DSS) Officer working in nearly 40 countries on 6 continents around the world including Thailand, Vietnam, Burma, Switzerland, Indonesia, Australia, Cambodia, Austria, Germany, Poland, Kenya, Uganda, Egypt, Brazil, Peru, and Columbia.

He received advanced training in the techniques and methodologies of counter intelligence and anti-terrorism in order to carry out responsibilities which included designing, installing, and maintaining state-of-the-art security solutions to protect national security information, U.S Embassies and other sensitive U.S. facilities, and diplomatic personnel, including U.S. Presidents and Secretaries of State. Sean was also called upon to design and implement security protocols and systems which included video surveillance, intruder detection, access controls, locks, perimeter security, and assessments. He also played an integral role in writing the U.S. Department of State security policies for post communications centers, controlled access areas, and building management systems in U.S. Embassies, U.S. Consulates, and inter-agency facilities worldwide.