Tender estimate pressure, a success fee and a post-tender omission
A quantity surveying firm is preparing tender documents for a government-funded school refurbishment. The client's project manager asks the QS to lower the pre-tender estimate by 12% to fit a political announcement, saying it is only an estimate. A contractor's representative offers a junior QS a success fee of 0.5% if that contractor wins. The QS director holds 8% of the shares in the same contractor. A bill of quantities omission worth LKR 14 million is discovered after bids close. The client wants to award to the lowest bidder without correction because the budget is fixed and the opening date is public. The firm's internal code requires conflicts to be declared and records to be accurate. The junior QS asks you, as the responsible director, what to do.
1. Identify the ethical, legal and professional issues in this scenario and explain why each matters.
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There are four separate issues, and they should not be bundled together.
- Pressure to lower the estimate. An estimate is a professional opinion relied on by the client and bidders. Lowering it by 12% to fit an announcement, without a documented change in scope or market evidence, misrepresents the likely cost. It may breach public procurement rules and the firm's own record-keeping standard. The phrase 'only an estimate' does not remove the reliance.
- Success fee to the junior QS. This is an offer of a bribe or secret commission. Accepting or not reporting it creates criminal and professional exposure and taints the tender process.
- Director's shareholding. An 8% shareholding in a bidding contractor is a conflict of interest. It must be declared and the director must recuse from evaluation or award advice. Non-disclosure undermines the integrity of the procurement.
- Post-tender omission. A LKR 14 million omission is a material error. Awarding without correction could mislead bidders and the client, and may amount to a breach of procurement rules. The firm has a duty to correct the record, not to protect the opening date.
Each issue matters because public money, fair competition and the firm's professional registration are at stake.
2. Set out the actions the firm should take, including disclosures, and explain the consequences of not acting.
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Actions
- Refuse the estimate instruction in writing. State that the estimate will be issued on documented market evidence and that any budget shortfall must be handled through scope reduction or a revised client budget, not by adjusting the professional estimate.
- Reject and report the success fee. Instruct the junior QS to decline in writing, preserve the communication, and report the approach to the client's procurement authority and the firm's compliance officer. Consider whether a police report is required.
- Declare the director's interest and recuse. Record the shareholding in the conflict register, remove the director from the tender evaluation and award recommendation, and notify the client. Do not let the director influence the correction.
- Correct the omission. Issue a written correction to the client and, through the client, to all bidders. Recommend a documented evaluation of the effect on bids: reissue, adjust, or cancel and retender. The client should not award on uncorrected documents.
- Document everything. Keep a contemporaneous record of instructions, disclosures and decisions.
Consequences of not acting: criminal liability for bribery or secret commissions, debarment from public procurement, professional disciplinary action, loss of the firm's licence to practise and reputational damage. The short-term delay is far cheaper than an award based on a known error and an undisclosed conflict.