Creation of suitable matrices for technical and commercial evaluations can provide a great tool to help reduce all offers to a common comparable scale, thus ensuring easy, transparent and objective comparisons to determine the L1

Opening the sealed commercial offers of the technically accepted vendors and declaring the lowest bidder—the L-One (L1)—does not end the complex and arduous process of procuring defence equipment. In some ways, it is just the beginning of the commercial evaluation process which finally leads to the signing of the contract. Constituted under the Ministry of Defence, the first task of the Commercial Negotiation Committee (CNC) in determining the L1 is to ascertain whether the price quoted by the lowest bidder is fair and reasonable. This provides the base in evolving an effective strategy for subsequent price negotiations.

A Compliance Statement is prepared incorporating commercial terms offered against what had been sought with an analysis of the discordance if any and impact of the same. Similarly, a statement is prepared in terms of deviations noticed in the delivery schedules, performance warranty, guarantee provisions, acceptance criteria and a host of other provisions. Thereafter, the CNC prepares a Comparative Statement of Tenders to determine the lowest acceptable offer (L1). Further negotiations are carried out with the L1 only in what evolves into a highly complex process as a large number of multifaceted aspects with commercial overtones have to be addressed. Though recent reforms have substantially improved the process, there is scope to streamline it further.