Responsive, Responsible Bidders

Posted on April 21, 2010 by

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Project managers who deal with procurements may be familiar with terms such as “Lowest Responsible Vendor,” “Responsive Bidder,” and “Responsive, Responsible Bidder.” These concepts are part of the fourth-edition PMBOK®’s Conduct Procurements process in which the buyer selects a seller. The basic process is that a buyer issues an Invitation for Bid (IFB) (or Invitation to Bid (IFB)) and bidders submit their bids for the buyer’s consideration. The buyer may have a policy such as selecting the Lowest Responsible Vendor. The “Lowest” refers to the monetary amount of the bid, “Responsible” refers to the bidder’s capabilities for performing the work, and “Responsive” refers to the bidder’s responsiveness to the IFB.

Here’s an example.  Grandma White is tired of shoveling snow off of her sidewalks during the winter. She has ten grandchildren and decides to pay one of them to do the shoveling for the remainder of the winter. She decides she will choose the Lowest Responsive, Responsible Bidder. She creates a form and sends a copy to each grandchild. This form is an IFB which asks how much the grandchild would charge, a written paragraph describing how they are capable of doing a good job, and a section to describe how they would use the money they earned. Grandma White received eight forms back (two of her grandchildren were not interested). Of the eight forms she received, two forms had the amount of money they wanted and a description of their capability, but no statements about how they would use the money they earned.  These two forms were not Responsive, because by not completing all sections of the IFB, they did not meet the requirements for submitting a bid. Grandma White throws out those two bids and now has six bids left to consider. Of these six remaining bids, one grandchild is eleven years old, so not only does she not have a driver’s license, but her parents aren’t always able to bring her to her grandma’s house. Another grandchild has a breathing problem that’s aggravated by working too hard when it’s cold outside. The youngest grandchild is probably not strong enough to shovel all the snow if it snows more than a couple inches at a time. So these three bids are not Responsible—it does not mean that they are irresponsible children, it just means that they may not have the capability to perform the job and are therefore unqualified. Now there are three bids left which are both Responsive and Responsible. Grandma White simply looks for the Lowest bid among these three. One grandchild asked for $15 per snow shoveling, one grandchild asked for $25 per snow shoveling, and the last grandchild asked for $30 per snow shoveling. The Lowest bid of these three was $15 per snow shoveling, so she sends that grandchild an Award Letter to inform him that he has been awarded the contract.