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The Hidden Cost of the Lowest Bidder: How L1 Tendering can set

Development Back – Case Study on the SSC Examination

K Aakash Jayandan

Guest Faculty, Department of Public Administration, Sree Vivekananda College, Kunnamkulam,

Thrissur, Kerala, India

DOI:

https://doi.org/10.51583/IJLTEMAS.2026.15020000035

Received: 15 January 2026; Accepted: 23 january 2026; Published: 03 March 2026

ABSTRACT

Public procurement constitutes a cornerstone of governance and economic development in India, with the L1

(Lowest Bidder) tendering system serving as the dominant mechanism for awarding public contracts. While L1

tendering is intended to promote transparency, competition, and fiscal prudence, its excessive reliance on the

lowest financial bid has increasingly raised concerns regarding service quality, accountability, and institutional

reliability. This paper critically examines the structural limitations of L1 tendering through a case study of the

Staff Selection Commission’s (SSC) examination contract awarded to Eduquity Career Technologies. Using a

qualitative case study methodology, the paper analyses the tender evaluation process and the subsequent conduct

of SSC computer-based examinations conducted between July and August 2025. Despite scoring lower on

technical parameters than established service providers such as Tata Consultancy Services (TCS), Eduquity

secured the contract due to its significantly lower bid under the prescribed 70:30 technical–commercial

weighting framework. The examinations were marked by widespread administrative and technical failures,

including system crashes, biometric verification errors, and exam cancellations, leading to nationwide protests

by candidates and public acknowledgment of mismanagement by the SSC Chairman. The study argues that rigid

adherence to L1 tendering in high-stakes public services prioritizes short-term cost savings over long-term public

value. It concludes by advocating procurement reforms that incorporate historical performance, institutional

credibility, and stronger accountability mechanisms to ensure reliable and equitable service delivery.

Keywords: Public procurement, L1 Tendering, Governance Failure, Staff Selection Commission, Public Service

Delivery

INTRODUCTION

Public procurement is the process by which various government agencies, such as ministries and departments,

purchase products or services in order to provide public services. It includes everything from determining the

needs for procurement to awarding contracts and making final payments (Hazarika & Jena, 2017). By assisting

an organisation in making wise financial decisions and locating the necessary investment opportunities, an

effective procurement system emerges as a potent component of public spending management systems (Hazarika

& Jena, 2017). Public procurement is a vital economic driver in India, accounting for approximately 18% of the

country's GDP, or roughly Rs. 40 lakh crore in absolute terms1. It plays a pivotal role in the functioning of public

organisations, serving as the primary mechanism for both large-scale infrastructure development—including

transport, power, refineries, and housing—and the day-to-day delivery of essential services such as medicines,

food grains, and sanitation(C. V. Commission, 2023b). Because timeliness is an essential feature of procurement

contracts, the widespread prevalence of project delays—found to affect over 73% of public projects in a 2020

World Bank study—leads to significant cost overruns, delayed delivery, and substantial opportunity costs for

both the government and society. Furthermore, maintaining high standards is crucial because while high-quality

procurement ensures user satisfaction and reduces maintenance expenditure, poor quality results in a dim

perception of the government among the public (C. V. Commission, 2023b). Ultimately, the success of any

government mandate depends on the effectiveness of decision-making and the quality of input throughout the

procurement process, making a robust procurement regime the key to the country's economic development.

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A tender is a legal document used by both public and private entities to solicit bids from suppliers for goods or

services. It’s a request for interested parties to submit their bids, describing how they can fulfil the needed

specifications, at a stated price or rate (What Is a Tender in Procurement? – Tendium, n.d.). Tendering in

procurement is a formal and transparent process designed to systematically invite and evaluate competitive bids

from potential suppliers. By fostering openness and fairness, this approach promotes competitive pricing and

ensures quality across procurement activities (What Is a Tender in Procurement? – Tendium, n.d.). A well-

structured tendering process not only contributes to cost efficiency but also strengthens supplier relationships

and ensures strict compliance with regulatory frameworks. As a central component of procurement policy,

tendering helps achieve substantial cost savings while mitigating risks through adherence to established rules

and procedures. It enhances competition among suppliers, enabling organisations to derive greater value for

money (What Is Tendering In Procurement & Importance | ProQsmart, n.d.). Moreover, the process ensures

transparency through clear communication, predefined evaluation criteria, and documented decision-making,

facilitating the orderly selection of suitable suppliers. The integration of technology has further simplified

tendering, making it more efficient, accessible, and accountable. Effective tendering requires meticulous

documentation, adherence to timelines, and robust transparency mechanisms, all of which are essential for

achieving optimal procurement outcomes (What Is Tendering In Procurement & Importance | ProQsmart, n.d.).

Additionally, the availability of different tendering methods—such as open, restricted, and competitive

dialogue—offers flexibility, allowing organisations to adopt the most appropriate, effective, and efficient

approach based on the specific requirements of each project. In India, public procurement frequently employs

price-ranking labels - L1, L2, L3 - to indicate who quoted the lowest, second-lowest, and third-lowest rates in a

competitive bid (Admin, 2025). L1 (First Lowest Bidder) refers to the bidder who submitted the lowest

responding price after technical and eligibility checks. L2 (Second Lowest Bidder) is the next-lowest responsive

bidder. Frequently used as a fall back if L1 fails post-award checks or contract signature. L3 (Third Lowest

Bidder) - the next in line; used infrequently but is critical when numerous disqualifications occur (Admin, 2025).

L1 tendering, though designed to ensure cost efficiency in public procurement, has increasingly raised serious

concerns regarding quality, efficiency, and accountability (Commission, 2023). Contracts awarded on the basis

of abnormally low bids are associated with a high risk of quality compromise, contractual non-compliance, and,

in extreme cases, total project failure (Commission, 2023), often resulting in short-lived or unusable public assets

and imposing substantial long-term maintenance burdens on the state (Commission, 2023; CAG, n.d.). These

risks are further aggravated by weak supervision, limited quality consciousness among contractors, and

inadequate understanding of quality management at the supervisory level (Commission, 2023), as well as

deliberate cost-cutting practices such as deleterious subcontracting to unqualified entities, use of substandard

materials, and deviations from prescribed technical specifications (CAG, n.d.). From an efficiency perspective,

the rigid emphasis on the lowest price frequently undermines project timeliness—an essential feature of

procurement contracts— with evidence indicating widespread delays in public projects due to contractors’

inability to mobilise resources at quoted rates, reliance on antiquated item-rate systems, administrative

bottlenecks, sluggish decision-making, and repeated retendering (Commission, 2023). Accountability is further

weakened by subjectivity in procurement decisions, policy ambiguities, and the absence of a comprehensive

national public procurement law (CAG, n.d.), alongside malafide practices such as post-bid dilution of eligibility

criteria, contract fragmentation to evade scrutiny, manipulation of bids through unrealistically low item rates,

and cartelisation (CAG, n.d.; Commission, 2023). Consequently, despite being the dominant procurement

method, L1 tendering often fails to deliver value for money and erodes public trust, underscoring the need for

rigorous assessment of abnormally low bids and stronger institutional safeguards, including enhanced

performance guarantees and accountability mechanisms (Commission, 2023).

The Staff Selection Commission (SSC) examination tender issue, which raised public awareness of the

limitations of lowest-bid procurement in high-stakes public services, serves as an example of the relevance of

this discussion (SSC Chairman Admits To Mismanagement, But Says Exam Won’t Be Cancelled, 2025). The

outsourcing of examination-related services to a lowest bidder, chosen primarily on cost considerations, resulted

in significant operational failures and administrative challenges (SSC Protest 2025; TCS Vs Eduquity Vendor

Controversy Technical Glitch | Bhaskar English, n.d.). The episode raised serious concerns regarding vendor

capacity, service quality, and institutional accountability, highlighting how an excessive reliance on L1 tendering

can have wider developmental and institutional ramifications.

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This article aims to assess how an over-reliance on lowest-cost selection can compromise governance and

development outcomes, as well as to critically explore the shortcomings of the L1 tendering method in India's

public procurement procedures. The article illustrates how awarding a high-stakes examination contract

primarily on the basis of the lowest bid resulted in serious operational failures, protests from applicants, and

concerns about institutional accountability through a thorough case study of the Staff Selection Commission

(SSC) tender issue. This study attempts to show that cost-centric tendering without sufficient capacity and quality

evaluation might jeopardise service delivery and undermine public trust by connecting procurement practices to

more general governance and development issues. These concerns are illustrated with empirical data from public

reporting on the SSC exam disruptions and vendor dispute, which reveals widespread malfunctions, candidate

unhappiness, and discussions over vendor selection criteria.

L1 Tendering in India: A Brief Overview

L1 tendering is the foundational method of public procurement, formally defined as the lowest tender, bid, or

quotation received and adjudged during the evaluation process((NIO), 2025). The identification of the L1 bidder

is strictly based on the final landing cost, a comprehensive figure that integrates the ex-works price with GST,

inland transportation, insurance, and essential services like installation or commissioning. Beyond its role as the

primary award criterion, the L1 price serves as a critical benchmark for national preference policies; for instance,

"Make in India" Class-I local suppliers and Micro and Small Enterprises (MSEs) falling within 20% and 15%

margins of the L1 price, respectively, are granted the opportunity to match that rate to secure portions of the

contract ((NIO), 2025; Sandeep Singh, 2025). However, this price-centric model is highly susceptible to

cartelization, where bidders manipulate the competitive premise by secretly agreeing on a winner while others

submit "complementary" or "cover" bids—inflated offers intended to create a fraudulent illusion of competition.

Such collusive schemes often leave detectable "red flags," including identical rates quoted by firms in

geographically diverse locations, shared communication infrastructure like fax numbers, or even matching

misspellings and handwriting across supposedly independent bid documents ((NIO), 2025; Sandeep Singh,

2025). To mitigate these risks, the regulatory framework restricts price negotiations exclusively to the L1 bidder

and empowers authorities to reject all bids if the process is suspected to be non-competitive or tainted by corrupt

practices

Any qualified and interested supplier, contractor, or service provider may submit a bid in response to a publicly

posted invitation in an open tender. Government agencies, public sector enterprises, and independent

organisations use it as the most open and competitive method of procurement. For instance, if a government

agency wishes to construct a school building, it may post an open tender on the Central Public Procurement

Portal (CPPP) or Government e-Marketplace (GeM), inviting participation from all eligible contractors (Gandhi,

2025). L1 tendering, formally recognized in consultancy frameworks as Least Cost Selection (LCS), is the

primary method of public procurement because it represents the simplest and quickest system of selection for

routine or standard assignments. By prioritizing the lowest evaluated price among techno-commercially

responsive bids, the government aims to achieve minimum satisfactory technical efficiency with economy for

projects where well-established practices already exist (Xiaojia et al., 2025). This model serves as the default

standard for the Indian government, requiring officials to provide specific justification if a selection method

other than LCS is used. While this price-based approach mirrors the selection systems used for general Goods

and Works to ensure administrative uniformity, it operates on a two-envelope system where only those who meet

a minimum technical qualifying benchmark have their financial bids considered. Ultimately, the L1 benchmark

not only facilitates competitive quoting but also acts as the essential anchor for national purchase preference

policies, allowing local suppliers and smaller enterprises to secure portions of a contract by matching the most

efficient market rate (Xiaojia et al., 2025).

The General Financial Rules (GFR) 2017 are the core framework for all public procurement in India, infusing

concepts of openness, competition, value for money, and accountability in government expenditure and contract

awards (India, 2017). Manuals released under GFR, such as the Manual for Procurement of Goods (2024

edition), elaborate on procurement methods, bid evaluation criteria, and mechanisms to ensure fair tendering

processes in accordance with these principles (Xiaojia et al., 2025). To supplement this framework, the Central

Vigilance Commission (CVC) publishes public procurement manuals and guidelines that emphasise vigilance

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oversight, transparency, and anti-corruption measures throughout the tendering and awarding process

(COMMISSION, 2023). For example, CVC's Integrity Pact principles advocate incorporating integrity

frameworks into procurement to reduce unethical behaviours. Together, these agreements provide a statutory

and procedural foundation for critiquing lowest-price (L1) bias in procurement, emphasising the importance of

quality, capability, and due diligence in addition to price (C. V. Commission, 2023a).

Although the General Financial Rules (GFR) 2017 and Central Vigilance Commission (CVC) guidelines

promote fundamental concepts of transparency, competitiveness, and accountability in public procurement, they

have significant shortcomings in practice. India's procurement framework lacks a comprehensive statutory

procurement law, hence the GFR and manual-based recommendations remain executive directives that are not

uniformly binding across all agencies, resulting in procedural discrepancies and enforcement gaps (MOHD

ARFATH, 2025). This has resulted in disparate bid documents, variable qualification requirements, and rigid

processes that can perplex vendors and stifle competitive flexibility. Furthermore, the lack of uniform procedures

across agencies, as well as the limited capacity for post-tender discussion under CVC guidelines, can cause

decision-making delays and contracts that are technically unviable despite achieving low-price criteria. These

structural and execution flaws reduce the effectiveness of the GFR/CVC framework in assuring quality,

efficiency, and value for money in government contracts (MOHD ARFATH, 2025).

METHODOLOGY

Case study method is going to be used to write this paper, In order to investigate and comprehend complicated

topics in real-life contexts, a case study method involves a thorough analysis of a particular subject, such as an

individual, group, organisation, event, or community. Researchers can have a thorough grasp of the dynamics

and causes at work by concentrating on a single case, comprehending their intricate relationships that may be

overlooked in larger, more quantitative investigations (Dhanya Alex, 2024). A case study can be defined in a

variety of ways, but the basic concept is that an event or phenomenon needs to be carefully investigated in its

natural environment. It is sometimes referred to be a "naturalistic" design as a result. On the other hand, the goal

of a "experimental" design, such a randomised controlled trial, is to control and alter the variable or variables of

interest (Greenwood, 1993).

In accordance with public procurement standards, the Staff Selection Commission (SSC) awarded its computer-

based examination contract using the L1 (Lowest Bidder) bidding approach, which selects the bidder who offers

the lowest financial cost among technically qualified enterprises. In this instance, Eduquity Career Technologies

was selected over well-known service providers like TCS mainly because of its significantly lower bid, even

though TCS scored higher on technical criteria

. The SSC Chairman later defended this choice as being both

cost-effective and complying with procedure. However, a number of SSC exams experienced serious technical

issues shortly after the contract was awarded, including server crashes, biometric authentication errors, frozen

computer screens, exam cancellations, and incorrect exam centre allocation

. As a result, candidates nationwide

staged widespread protests. Although the exams were not cancelled, the SSC Chairman later acknowledged the

service provider's mismanagement and infrastructural shortcomings. This underscores how cost-centric L1

tendering can compromise administrative credibility, public trust, and service quality when applied to mission-

critical public services like national recruitment exams

The SSC Tender Case – Case Study

The SSC was established in 1975 by the Government of India to fill lower-category government posts, initially

as the Subordinate Services Commission. Article 320 of the Constitution of India originally entrusted the Union

Public Service Commission (UPSC) with the responsibility of conducting examinations for recruitment to posts

https://www.shiksha.com/news/sarkari-exams-ssc-chairman-defends-eduquity-over-tcs-in-tender-row-aspirants-slam-exam-

glitches-blogId-207748

https://www.newsgram.com/education/2025/08/04/ssc-chairmans-assurance-falls-short-of-convincing-protesting-students

https://timesofindia.indiatimes.com/education/news/ssc-holds-re-exam-for-59500-candidates-after-tech-failures-how-it-

happened-and-whats-changed/articleshow/123577809.cms

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and services under the Central Government. However, the Estimates Committee of Parliament, in its 47th Report

(1967–68), recommended the establishment of a separate agency to conduct examinations for recruitment to

lower categories of posts, thereby reducing the burden on the UPSC (Staff Selection Commission, 1967).

Subsequently, the First Administrative Reforms Commission (ARC), in its report on Personnel Administration,

observed that a large proportion of government employees belonged to Class III and Class IV services and

emphasized the need for a centralized recruitment mechanism for non-technical posts with similar eligibility

criteria across departments (Staff Selection Commission, 1967). Acting on these recommendations, the

Government of India constituted the Subordinate Services Commission through a resolution dated 4 November

1975. This body was later redesigned as the Staff Selection Commission (SSC) on 26 September 1977. The

SSC was given the task of hiring people for Group "C" and then Group "B" (Non-Gazetted) non-technical

positions in a number of Indian government ministries, departments, and lower-level offices. The SSC is now a

key institution in the recruiting architecture of the Indian administrative system due to the substantial expansion

of its activities over time. (Staff Selection Commission, 1967).

Competitive exams for hiring to various positions in the Government of India and its Attached and Subordinate

Offices were conducted using conventional paper and pencil methods in the early stages of SSC operations. tests

were presented to prospective students using a pre-formatted response code sheet that was subsequently assessed

by automated computers. This approach progressed from paper and pencil to Optical Marks Recognition (OMR)

based tests

. The Commission has administered its objective type multiple-choice tests using a computer-based

evaluation method since June 2016. All objective type multiple-choice exams are now administered in computer-

based format, and the transition to this mode of assessment was swift and comprehensive. This approach requires

eligible candidates to register online in order to take competitive tests (S. S. Commission, 2024). SSC issues

their admission certificates at a set time after allotting examination locations. Candidates take exams at the

designated testing locations on the specified dates and times. The figure depicts the procedure of conducting an

examination (S. S. Commission, 2024).

https://ssc.nic.in/SSCFileServer/PortalManagement/UploadedFiles/RFPEMU_25_01_2024.pdf

Figure 1 Computer-Based Mode

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Staff Selection Commission (SSC) is a government recruitment agency, the actual conduct of the computer-

based examinations is outsourced to external entities, The Staff Selection Commission (SSC) has solicited bids

for the selection of Service Providers for Exam Monitoring Units (EMUs) for Computer-Based Examinations.

Bidders are recommended to read the Bid document attentively. Bids will be considered submitted after careful

study and evaluation of the Bid document, with a full grasp of its ramifications. This Section contains general

information about the Issuer (SSC), as well as important bid submission dates and addresses (S. S. Commission,

2024). The selection process for the Exam Monitoring Unit (EMU) follows a structured three-phase Quality and

Cost Based Selection (QCBS) framework designed to ensure both technical excellence and economic value.

Initially, bidders must satisfy mandatory pre-qualification criteria, which include being a registered legal entity

with a minimum annual turnover of INR 10 Crores, a positive net worth, and a history of executing at least two

audit-related projects in the government sector worth a cumulative INR 5 Crores (S. S. Commission, 2024). To

ensure total independence, any agency already associated with the SSC for exam conducting, content authoring,

or software provision is strictly disqualified from this monitoring role. In the second phase, eligible bidders

undergo a technical evaluation scored against criteria such as project experience, manpower strength, and a live

demonstration of technology tools, requiring a minimum qualifying score of 70%. Finally, the selection is

determined by a Final Composite Score, where the technical proposal is weighted at 70% and the commercial

bid at 30% (S. S. Commission, 2024). The final contract award is determined by a composite score that assigns

a 70% weight to technical merit and a 30% weight to the normalized commercial proposal (tender). This

approach ensures that while the lowest commercial bid (Fmin) serves as the financial benchmark, the selection

process ultimately prioritizes high-level technical expertise and proven competency over cost alone.

Eduquity Career Technologies was selected over well-known service providers like TCS mainly because of

its significantly lower bid, even though TCS scored higher on technical criteria. Following the conduct of several

SSC computer-based examinations, serious instances of administrative and technical mismanagement were

widely reported. Multiple examination centres experienced server crashes, delayed logins, frozen computer

screens, biometric authentication failures, power disruptions, and abrupt exam cancellations, often after

candidates had already reached distant centres, indicating poor infrastructural preparedness and inadequate

contingency planning (Indian Express, 2024). These recurring disruptions triggered nationwide protests by

aspirants, who alleged that the examination process had become unreliable, arbitrary, and unfair (The Print,

2024; Times of India, 2024). Acknowledging the gravity of the situation, the SSC Chairman publicly admitted

to mismanagement and infrastructural lapses on the part of the service provider, although the Commission

maintained that the examinations would not be cancelled in their entirety (NDTV, 2024). Collectively, these

events highlight systemic failures in exam administration that had significant social and psychological costs for

candidates and raised serious concerns about the robustness of institutional oversight mechanisms.

Analysis: What the Case Reveals

The SSC awarded the tender to conduct the examination to Eduquity Career Technologies, a private service

provider, primarily due to their lowest bid as submitted in the tender document. The exam was scheduled to be

conducted from July 24 to August 2, 2025, but its implementation was marred by several administrative and

technical failures. SSC employs a 30/70 weightage method in evaluating tenders, allocating 30% to the

commercial bid and 70% to the technical proposal. SSC Chairman, Gopalakrishnan revealed that while TCS

scored higher on technical parameters, Eduquity’s financial bid was significantly lower, and when both factors

were combined, Eduquity emerged as the winner. However, a closer look at the company’s past record reveals

a history of problematic exam conduct. For instance, the Madhya Pradesh Teacher Eligibility Test (2022),

initially scheduled with Eduquity in March 2022, was reportedly subcontracted to Sai Educare Private Ltd., and

the exam paper allegedly leaked and circulated widely on social media. Similarly, in March 2023, the Common

Entrance Test (CET) Cell of Maharashtra entrusted Eduquity with organizing an MBA entrance exam, which

faced allegations of irregularities and unauthorized leaks, leading over 150 students to approach the Bombay

High Court seeking a re-examination. Notably, the Central Directorate General of Training had blacklisted

Eduquity in 2020 due to paper leaks and cheating in previous exams, which should have barred the company

from securing future government contracts. Despite this history, the same company was awarded a tender to

conduct a nationwide exam, highlighting serious gaps in the evaluation process. This raises the urgent need to

develop a more robust and comprehensive method for selecting bidders—not solely based on the commercial

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bid and technical proposal—but also including new parameters such as historical performance, reliability, and

past compliance records to ensure that public examinations are conducted with integrity and accountability.

Way Forward

The repeated failures in exams conducted by Eduquity Career Technologies highlight the need for reforming the

tender evaluation process for public examinations. Moving forward, the selection of service providers should

not rely solely on the lowest financial bid and technical scoring but also incorporate historical performance and

reliability as critical parameters. A centralized vendor performance database could be maintained by government

agencies to track past contract compliance, exam integrity, and operational efficiency. Strict prequalification

criteria should be enforced, including background checks, past blacklisting records, and references from prior

government projects. Additionally, independent audits of the tender process and pilot testing of proposed

examination software could minimize risks before full-scale implementation. Finally, establishing contingency

and accountability protocols—such as penalties for failures, retest plans, and real-time grievance redressal

mechanisms—will ensure that public examinations are conducted fairly, transparently, and efficiently,

safeguarding the interests of millions of candidates.

CONCLUSION

The analysis of India's L1 tendering system through the SSC examination case highlights the structural limits of

cost-centric procurement in high-risk public service delivery. While L1 tendering is based on openness and fiscal

discipline, its emphasis on the lowest financial bid frequently ignores crucial characteristics of institutional

capacity, service quality, and risk management. The SSC-Eduquity case highlights how procedural adherence to

tender criteria may still lead to systemic failure when previous performance, operational reliability, and ethical

track records are removed from bidder evaluation. The extensive technical problems, administrative lapses, and

following protests not only disrupted exams, but also damaged public trust in the Indian state's primary

recruitment institution.

This instance demonstrates how L1 tendering, when applied strictly to complex and mission-critical services like

national tests, can damage governance outcomes while imposing severe social and psychological costs on

citizens. The longevity of procurement frameworks that prioritise short-term cost savings above long-term value

for money reveals deeper institutional flaws, such as fragmented regulations, poor post-award accountability,

and ineffective oversight mechanisms. As illustrated, even the inclusion of technical weightage and explicit

evaluation criteria is insufficient to prevent negative results when previous failures and blacklisting histories are

ignored or weakly enforced.

As a result, improving public procurement in India entails moving beyond a restricted definition of value based

solely on price. Integrating historical performance data, institutional credibility, and compliance records into

tender evaluation frameworks is critical for assuring administrative reliability and protecting the public interest.

The SSC case serves as a cautionary tale about how progress might be hampered when procurement procedures

fail to connect economic efficiency with governance integrity. A transition to a more holistic, performance-

oriented procurement system is not only desirable, but also required for regaining public trust and ensuring that

public institutions provide services in an effective, fair, and sustainable manner.

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