Don’t let low bids drive out high-quality ones”

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On June 6, the WeChat account for Quality and Certification (ID: cncete) posted: People’s Daily on \"winning bids at low prices\": Without profits, there can be no quality! (Click the title to read) An article with over 100,000 views, which sparked widespread discussion in the industry regarding winning bids at low prices. Today, I’m sharing another review of a bid that was won at a low price, for the readers’ enjoyment. What’s your opinion on winning bids at low prices? Don’t Let Low Prices Lead to the Displacement of Quality – Author: Hu Libiao. At present, in some places, there is a practice of awarding contracts to those who offer the lowest prices in bidding processes; people focus not on quality but solely on lower prices. This leads to lower quality and safety standards during the implementation of the winning projects, creating numerous potential risks. In response, the People’s Daily published a commentary recently titled \"Quality Should Be the Foundation for Enterprises to Sustain Themselves,\" stating that the phenomenon of winning bids at low prices stems, fundamentally, from a lack of a competitive environment that encourages survival of the fittest. While some companies invest in research and development to improve product quality, other companies manage to compete on the same stage – and even succeed in such competition – by cutting corners and engaging in counterfeiting. Over time, no companies will be willing to invest in innovation and quality; everyone will engage in price competition, leading to the phenomenon of \"bad money driving out good money.\" The solution is to further improve the market environment so that companies can rely on product quality to speak for themselves. In fact, the issue of winning bids at low prices has existed for a long time, and the resulting \"problems related to low quality\" have also attracted attention for a while now. The nationwide “problematic running track incident” that occurred last year is a typical example. The root cause of this incident was the issue in the school’s bidding process, where only price was considered and quality was ignored. During this year’s ** nationwide period, some deputies to the People’s Congress proposed that China’s bidding system should be revised; it should not continue to follow the old approach of awarding contracts to the lowest bidder, and quality standards should be emphasized and strengthened. By reviewing regulations such as the Law on Bidding and Tendering and the Interim Provisions on Bid Evaluation Committees and Bid Evaluation Methods, it is found that the bid evaluation methods currently used in China are mainly the comprehensive evaluation method and the lowest evaluated bid price method. However, the relevant laws and regulations do not specify the scope of application and prerequisites for the \"method of selecting the bid with the lowest evaluated price,\" nor do they define the specific circumstances and criteria under which a bid price is below cost. As a result, in the vast majority of tender projects that should undergo comprehensive evaluation based on technical, commercial, and price factors, this method of selecting the bidder with the lowest price is misused and abused in an attempt to achieve maximum cost savings and to showcase leadership achievements. In practice, it directly evolves into awarding the contract to the lowest bidder. The logic behind this seems reasonable as well: first of all, even if one chooses the option with a higher price, there is no guarantee that high-quality products and services will be provided ； Secondly, if reasonable pricing is adopted, it is necessary to explain what constitutes \"reasonableness\", and numerous audit checks are required; whereas using the lowest bid makes things much simpler – even in the event of quality issues, responsibility can be shirked by claiming that the bidding process was legal and compliant ； Third, the company only needs to participate in the bidding process; it is not the user, and thus it has plenty of reasons to shirk responsibility when problems arise during the usage phase. A fair price is a form of respect for others’ innovation and labor, as well as a respect for oneself. Abnormal prices reflect an abnormal supply and demand relationship, a legal environment, and concepts of credit. The practice of awarding contracts to the lowest bidder currently used in tenders in our country has objectively led to extremely adverse negative market effects. Some suppliers who prioritize quality and sustainable development are unable to make it onto the lists of suppliers for manufacturing companies, as they do not adopt a low-price strategy; as a result, they cannot supply products and services to these companies. The companies that do make it onto such lists often have very low profits and little willingness to cooperate, which leads to delays in delivery times and a lack of resources to ensure quality. In the end, the entities conducting the bidding end up paying a higher price. Winning bids at the lowest price has gradually eroded the environment in China’s manufacturing sector that fosters a commitment to quality, innovation, and an appropriate level of industry concentration. It also allows companies to use this as a pretext for compliance, without considering the actual possibility of fulfilling their obligations or the consequences that may arise. Once a company gets involved in this vicious competition where \"there is no lowest price, only lower prices,\" it falls into a dead end with no way out. There have been enough painful lessons; it is now imperative to amend the laws and regulations related to bidding. It is necessary to clarify the scope of application and prerequisites for the \"lowest evaluated bid price method\" as stipulated in the Bidding Law; alternatively, this principle should be abandoned in favor of the \"average evaluated bid price method,\" with an increased emphasis on scoring factors such as quality, technology, and brand. At the same time, it is necessary to establish an industry cost pricing system to prevent maliciously low bidding. Of course, it is also necessary to establish a credibility system and improve mechanisms for punishing those who fail to keep their promises. Acts such as bidding under false pretenses, illegal subcontracting, unlawful division of work, collusive bidding, fraudulent bidding, and other forms of deception must be dealt with strictly in accordance with the law, so that those entities with good qualifications and high reputations can have more opportunities and space.