I seriously doubt that anyone dealing with a multi-million dollar project is simply going to take the lowest bid without doing some level of due diligence. While few go to the levels outlined by Julian, we, as professionals, have to go through the technical proposals to ensure that the proposer is at least competent, and at least compliant to the KPPs. And certainly, in government, CYA is a major factor, so lowest bid is not guaranteed to win unless there's an extremely high confidence that the contractor can pull it off. If anything, CYA automatically dictates that lowest bid gets tossed out, along with highest bid.
Examples from aerospace/defense that I'm aware of
> We bid against a competior for the very last buy of a large subsystem and underbid the competior by a significant amount, and they had never built anything in that class of subsystem before. Nevertheless, they won, and wound up having to get help from us afterwards. CYA says that we were a totally bad risk for the contracting officer in charge because we had just gotten fined for falsification of test records in the year leading up to the RFP.
> We bid on a system and were probably 50% higher than the incumbent, but we won. CYA says that the incumbent had serious issues in the past, and we were later told by the customer that our proposal was substantially superior to the incumbent's, particularly in the area of a single KPP that was actually erroneously specified by the customer, which we caught and proposed a much tighter requirement that was correct for the intended application.
> In one case, our dreaded BD folks decided to drastically underbid on an effort that we had previously briefed a higher amount to the customer. The contracting officer did not do their due diligence, and didn't listen to CYA and awarded us the contract, which we promptly overran. The contracting officer was summarily fired from the program, although our BD folks escaped unscathed. To make it worse, the contracting officer took his windfall and funded a competitor, who later ate our lunch, and the program itself wound up getting mothballed.
TTFN (ta ta for now)
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