The L1 Problem: What Lowest-Bid Procurement Does to Outturn Cost

Indian public procurement rules do not require award to the lowest bidder. Rule 173(xvi) of the General Financial Rules says a contract should "ordinarily" be awarded to the lowest evaluated bidder, and the Department of Expenditure's Manual for Procurement of Works, Second Edition 2025 states that "Price alone may not necessarily represent VfM" — yet Least Cost Selection remains the declared normal system for works. This report sets out what the rules permit, what the audited record shows happens to the tendered price after award, and which alternatives the same rulebook already allows.

Part of AECS Research Global's publications programme — drawing on ARG's work across cost management, EPC advisory and integrated project delivery. Download the full report below.