Why 30% of Bids Fail in India: Compliance Mistakes You Must Avoid

Why 30% of Bids Fail in India: Compliance Mistakes You Must Avoid

In India’s vast and competitive procurement landscape, tendering and bidding processes are crucial for businesses looking to secure government and public sector projects. However, despite offering the best price or superior capabilities, many bidders fail to secure contracts. One of the primary and recurring reasons? Non-compliance with bid requirements.

In this blog, we explore how significant this issue is, why bids fail due to compliance-related errors, and what businesses can do to avoid these costly pitfalls.

📊 The Percentage: How Many Bids Fail Due to Non-Compliance?

Based on data and analysis from procurement audits, industry studies, and reports from tender authorities such as the Central Vigilance Commission (CVC) and Public Procurement portals like CPPP and GeM, it is estimated that:

Nearly 20% to 30% of bids in India are rejected due to compliance issues alone.

In some highly regulated sectors like defense, railways, or oil & gas, compliance-related bid failures can even reach 40%.

Key Sources:

• CVC Annual Reports highlight frequent cases of disqualification due to non-fulfillment of eligibility criteria.
• State Government Procurement Audits often show that a large proportion of technically non-compliant bids are disqualified before financial evaluation.
• Industry insights from organizations like FICCI and CII emphasize the compliance burden as a significant challenge, especially for MSMEs.

📌 What Are the Common Compliance-Related Reasons for Bid Rejection?

1. Documentation Gaps

• Missing certificates (GST, PAN, ESI, PF, etc.)
• Incorrect formats (e.g., affidavit not notarized, outdated forms)
• Expired licenses or certifications

2. Technical Non-Compliance

• Failure to meet technical specifications or solution requirements
• Deviation from BoQ or product standards
• Incomplete technical proposal or unclear drawings

3. Eligibility Criteria Not Met

• Lack of minimum turnover, experience, or manpower
• Consortium or JV documents not in order
• Incorrect interpretation of bidder classification (OEM vs reseller, MSME status, etc.)

4. Legal and Financial Discrepancies

• Non-submission of EMD (Earnest Money Deposit) or bid security
• Inconsistent financial statements
• Failure to disclose litigation or blacklisting status

5. Failure to Adhere to Tender Timelines

• Late submission of bids
• Non-attendance at mandatory pre-bid meetings
• Delay in response to corrigenda or clarification requests

1. Documentation Gaps

Overview: One of the most frequent causes of disqualification. Authorities require strict adherence to documentation formats and timelines.

Typical Mistakes:

• Submitting expired certificates (e.g., GST registration not renewed)
• Uploading scanned copies with poor readability
• Affidavits not notarized or not on proper stamp paper
• Missing signatures, seals, or annexures

Example – Construction Industry: A contractor bids for a PWD road project but forgets to submit the latest solvency certificate from a scheduled bank. Despite offering the L1 (lowest) bid, the tender is rejected at the technical stage.

Example – IT/Software Sector: An IT firm bidding for a Smart City tender is disqualified because their ISO 27001 certificate is expired by just 5 days at the time of bid submission.

Tip: Create a digital document library with expiration alerts for critical compliance papers.

2. Technical Non-Compliance

Overview: Even minor deviations from technical specifications or solution architecture can lead to bid rejections, especially in technical procurement.

Typical Mistakes:

• Quoting a product that doesn’t match the required specifications (make/model, warranty, capacity)
• Proposing alternate solutions without approval
• Not submitting supporting documents like datasheets, technical drawings, or system architecture

Example – Electrical Supply Tender (PSUs): A vendor quotes LED lights with a CRI of 70 instead of the specified CRI ≥80. Though the product meets other specs, the bid is deemed non-compliant by BHEL.

Example – Defense Sector: A company offering drone surveillance misses out on a mandatory MIL-STD certification for ruggedness. The bid is rejected in the technical round.

Tip: Always clarify specifications during the pre-bid meeting or via official queries.

3. Eligibility Criteria Not Met

Overview: Tenders often define strict eligibility based on turnover, past experience, licenses, or manpower strength. Failure to meet any single criterion—even marginally—leads to disqualification.

Typical Mistakes:

• Misunderstanding the “similar work” definition
• Aggregating multiple small projects to meet one large experience clause (not always allowed)
• Claiming MSME benefits without valid UDYAM registration

Example – Manufacturing Sector (Railways): A fabrication company with ₹4.8 CR turnover applies for a tender with ₹5 CR minimum turnover requirement. Despite being a capable firm, the bid is technically rejected.

Example – Healthcare Equipment Tender: A firm submits bids for a government hospital’s ICU ventilator tender but hasn’t completed similar government orders in the past three years, which was a qualifying requirement.

Tip: Perform an eligibility audit before investing time in bid preparation.

4. Legal and Financial Discrepancies

Overview: Financial compliance ensures bidder stability and reliability. Errors or misstatements here are red flags.

Typical Mistakes:

• EMD not submitted in proper format (e.g., DD instead of BG)
• Financial statements not certified by a CA
• Inconsistencies between the bid declaration and actual bank/turnover statements
• Ongoing litigation not disclosed

Example – Oil & Gas Sector (ONGC, HPCL): A contractor’s bid is rejected because their financial bid included conditions (e.g., subject to tax changes), which violates the “unconditional bid” clause.

Example – Public Procurement – MSMEs: A small firm avails exemption from EMD citing MSME status but fails to attach the proper UDYAM certificate or exemption notification. The bid is disqualified.

Tip: Always verify whether bid security, solvency certificate, and litigation history disclosures align with current tender norms.

5. Failure to Adhere to Tender Timelines

Overview: Public procurement follows strict schedules, and missing a step can be fatal to your chances.

Typical Mistakes:

• Bid not submitted by the deadline (common in manual tenders)
• Not attending a mandatory site visit or pre-bid meeting
• Delay in submitting physical documents like Power of Attorney or BG (if required in original form)

Example – Telecom Infrastructure Tender: A company preparing a BSNL bid uploads documents on time but misses the submission of the original EMD DD by 2 hours. The bid is rejected as “non-responsive.”

Example – Smart City RFP: A consulting firm skips the pre-bid conference assuming it’s optional. Critical clarifications and addenda are issued post-meeting, which they miss, leading to an incomplete technical proposal.

Tip: Set internal reminders 48 hours in advance for all physical or time-sensitive submissions.

🔎 Industry-Wise Sensitivity to Compliance

🏗️ Impact of Bid Rejections on Businesses

1. Loss of Time and Resources: Preparing bids can take weeks of effort and substantial resources—especially when done repeatedly without success.
2. Missed Revenue Opportunities: For SMEs and startups, even one large tender can transform the business trajectory.
3. Reduced Confidence and Credibility: Repeated rejections may tarnish a company’s reputation with procurement authorities.
4. Wasted Investment: In some cases, companies invest in infrastructure or equipment in anticipation of winning a contract.

✅ How to Improve Bid Compliance: 7 Proven Tips

1. Carefully Read and Understand the Tender Document
   • Highlight key compliance clauses.
   • Cross-check every requirement with internal capabilities.
2. Create a Bid Checklist
   • Ensure no document or form is missed.
   • Double-check for validity and format.
3. Assign a Compliance Officer or External Consultant
   • Especially for large or high-value bids, having a dedicated resource helps streamline submissions.
4. Standardize Frequently Used Documents
   • Maintain updated versions of certifications, legal documents, company profiles, etc.
5. Attend Pre-Bid Meetings
   • Clarify ambiguities, raise queries, and understand evaluation parameters.
6. Use Digital Bidding Platforms Efficiently
   • Leverage platforms like GeM, CPPP, and eProc portals that offer alerts and automated compliance checks.
7. Review Past Rejections
   • Analyze previous feedback and audit findings to learn from past mistakes.

💬 Final Thoughts

While winning bids may seem like a game of pricing and capability, compliance plays a silent but decisive role. With 20–30% of Indian bids failing purely due to compliance issues, businesses—especially MSMEs and new entrants—must shift focus to ensure bid documentation, eligibility, and procedural adherence are water-tight.

By embedding a culture of compliance into your tendering strategy, you not only increase your chances of success but also build long-term credibility with procurement bodies.

📥 Need Help with Bid Compliance?

If you’re struggling with bid preparation or facing repeated rejections, consider working with tender consultants or digital compliance tools. A small investment can unlock big opportunities.