Competitive bidding

Sunday, October 11, 2009

BALTIMORE – Wednesday’s Special Open Door Forum on competitive bidding revealed once again that providers are still foggy on how CMS will weed out unrealistically low bids.

That’s why CMS official Martha Kuespert kicked off the forum, which covered the bid submission process, by recapping how it will determine a bona fide bid “just so it is clear for everyone.”

Here’s what Kuespert said:

“The term bona fide generally means in good faith, sincere or legitimate. The competitive bidding program regulation requires that each supplier must submit a bona fide bid that complies with all of the terms and conditions contained in the request for bid.

“To ensure that we only award contracts to suppliers that submit bona fide bids, the bid evaluation includes a process to identify and eliminate irrational infeasible bids: Bids that are so low that it would be impossible for the provider to furnish the item at the bid prices.

“This process is completed after all eligibility screens and before we identify the single payment amount.

“In the bona fide bid process, we screen the bid using statistical measures. The screen is based on the bid for each item, and not on other factors like retail prices.

“If a bid is identified through this screening process as extremely low in relation to other bids, we will evaluate that bid further. We may ask the bidder to give us additional information to make sure the bidder can actually furnish the item at the bid price. When we contact the bidder about a potentially non-bona fide bid, it is the bidder’s responsibility to provide sufficient information to prove it can furnish the item at the bid price. This should include, at a minimum, a brief description of the rationale for the bid, along with financial documentation to support the rationale.

“At the last Open Door Forum, we indicated that manufacturers’ invoices are one type of documentation that can be used in support of the bid. We would like to be very clear that this is just one example. Bidders can submit other types of documentation to provide a complete picture of the cost of furnishing the item.

“Depending on the particular circumstances of a particular bid, a manufacturer’s invoice may not be sufficient to support the bid. Once we receive the bidders information, there are two possible outcomes. If we determine that a bid for an item is not bon fide, the suppler is eliminated from competition for the entire product category in the competitive bidding area. However, if the bidder proves it can furnish the item at the bid price, it will be eligible for consideration as a contract supplier and will be in the array from which the single payment amount is identified.

“All of the bids in the array from which the single payment amount are identified, are qualified bids, the bidders meet all eligibility, quality and financial standards, are accredited and licensed and the bids are bona fide.

“As we discussed last week, the single payment amount is the median of qualified bids at or below the pivotal bid.”

A Power Point of Wednesday’s presentation, “The Bid Submission Process,” can be downloaded now from the CBIC Web site at A transcript of the forum and an audio recording will be available on the site on Oct. 19.