A KRW 101.6 billion bid
where price is worth 10%

Ask a CEO preparing for a public tender “How did you set your price?” and the answer is usually similar. A little below the competition, and if we lose, lower next time. The assumption is that a tender is ultimately a price fight.

But that assumption often sets in before anyone has checked the evaluation table. Let’s put side by side one large project that was just announced and one whose result has just come out.

Start by opening the evaluation table

At the end of September, Korea’s National Health Insurance Service (NHIS) put out its ‘2026 aging infrastructure replacement and information system upgrade project’. The budget is KRW 101.6 billion. Replacing and expanding 450 units of network and security equipment, bringing in 19 units of new equipment, reinforcing the disaster recovery (DR) environment, and strengthening security such as encryption and access control are all bundled into a single project, with 384 requirements.

The evaluation weighting is 90% technical, 10% price. In other words, in a KRW 101.6 billion project, price accounts for 10 points out of 100.

Where the contest was actually decided

What happens in a project with the same structure is shown by the K-Edufine upgrade project (KRW 217.3 billion; K-Edufine is the financial and administrative system used by Korean schools and education offices), whose result was announced on 1 October. Here are the scores of the three consortia.

Across the three, the gap between the highest and lowest price score is 0.002 points. On technical score, 3.84 points opened up between first and second place alone. And the consortium that got a perfect price score did not become the preferred bidder.

This project also shows pressure from the opposite direction. According to the report, the total budget shrank from the original figure, and in the meantime “as semiconductor prices rose, market prices for servers and storage jumped well above the unit prices originally estimated.” In a project where the budget is shrinking and equipment costs are rising, cutting the price further does not shrink the score gap. It shrinks the contractor’s margin.

Buyers are raising the floor too

From 15 September, Korea’s Public Procurement Service (PPS) raised the minimum winning-bid rate by 2 percentage points across every bracket of its eligibility review for military supplies. The minimum winning-bid rate is the floor below which a bid cannot win. PPS said the aim was to “ensure that” the small and mid-sized suppliers “can receive fair compensation”.

The field is different, but the direction is the same. Buyers have started to read an excessively low price as a quality and delivery risk, and so they are raising the floor themselves. It means the room to use price as a weapon is narrowing within the system itself.

In a tender where price is weighted at 10%, cutting your unit price can mean losing margin before you gain any points.

Why companies cut anyway

Even knowing the evaluation table, many companies end up lowering their price. Usually for three reasons.

• The technical score feels out of their control. Evaluators’ judgement is hard to predict, and price looks like the only number you get to set yourself.
• The memory of a narrow loss last time lingers. But whether it was really price that decided it, you only know by going back to the score sheet.
• No cost floor was set in advance. Without a baseline, the number drops one more time in the meeting just before the deadline.

Five things to do before you set the price

1. Check the price weighting in the scoring table first. Whether it is technical 90 : price 10 or 80 : 20 changes the very role price plays.
2. Calculate the exchange rate between 1% of price and 1 technical point. Work out how many percent you would have to cut to gain one price point, and set that amount next to what it could strengthen, and by how much, in your proposal.
3. Put your cost floor in writing before you bid. If you are in a consortium, settle who carries how much of the equipment, solution and delivery costs. Do not move this line in the meeting just before the deadline.
4. Align the rationale for your price with the language of your proposal. Only if you can explain why this price fits this scope and quality can you hold it in the negotiation after you are named preferred bidder.
5. Review the score sheet once the result is out. Record whether it was technical or price that decided it this time, and next time you can avoid the vague conclusion of ‘a bit lower’.

Closing

Price matters in public tenders. But only as much as the evaluation table says it does. If price is weighted at 10%, the right order is to work out first where the remaining 90% will come from, and then set the price.

What price to bid is ultimately for management to decide. Our job is to lay the evaluation table, your costs and the competitive landscape side by side and break out the options, so that decision rests on calculation rather than instinct.

📩 Facing your next tender or a large proposal? If you want to set your price with the evaluation table and your costs side by side, start the conversation in a 60-minute online coffee chat.