Every supplier or procurement professional should have a better understanding of L1, L2, and L3 tenders, as it is essential to get the best deal. Now procurements are not about choosing the lowest price. It’s more about balancing cost, quality, and fairness. Yet, the lowest bidders’ tenders continue to play a crucial part in tenders. To win the contracts and help buyers stay fair, these categories help. Basically, they are based on the quoted prices. However, if you don’t want the hassles of finding the right e-tender on various websites, then choose TenderShark to conveniently find government tenders in your state. They provide various genuine contracts. For a better understanding of these systematic terms, this blog explains everything that you need to know.
What are L1, L2, L3 Tenders?
These are the terms that are used to calculate bids in government and public procurements, including e-tenders to rank tenders by price. In simple words, these categories are set up for bidders to meet the technical and eligibility requirements.
First Lowest Bidder Tenders
L1 refers to the “lowest bidder 1” who has quoted the lowest price among all the bids. They are technically and commercially responsive. They tend to win the contract due to the lowest price.
Second Lowest Bidder Tenders
L2 tenders mean “Second Lowest bidder”; they cover the same criteria but quoted the second lowest price, and in case the L1 tender is disqualified or out of the race, then L2 has the major chance to win.
Third Lowest Bidder Tenders
L3, the third lowest bidder, is also responsive and eligible. However, they’ve quoted the third price to bid, and it has less chance of winning the league. However, by any chance, if L1 and L2 have disqualified, then L3 has the opportunity to close the deal.
Note: The “Responsive” term refers to the bidder being qualified and meeting all the eligibility criteria. From pre-qualification, technical, and commercial specifications.
If a bidder fails to meet these standards, they will be disqualified. Even if they have low pricing, they still won’t be able to participate in the bid.
How does it work?
This is the process that all bidders have to follow-
- Publishing of tender: The authority announces the project and invites companies or individuals to bid, which is called a “tender notice.”
- Submission: To participate, all interested bidders have to submit the documentation and required technical details along with the “price bid” before the deadline.
- Evaluation: The authority reviews overall documentation and bid pricing. Only those who qualify for this stage will be considered.
- Ranking: Based on the prices, bidders are ranked as L1, L2, and L3. Those who didn’t submit the complete documentation and requirements will be disqualified.
After the Ranking Decided Process
L1-First Lowest Bidder: They are most likely to win the contract due to the lowest prices, regardless of the quality and technical requirements. So, this process involves overall work execution, contract negotiations, and signing.
L2-Second Lowest Bidder: These categories of bidders are kept as backup. In case L1 didn’t get the contract or get disqualified at last, then L2 is the option. However, some authorities may negotiate with L2.
L3- Third Lowest Bidder: Mostly kept as backup in case many vendors need the bid. In case L1 and L2 both fail to get the deal, L3 directly wins the contract.
When L1, L2, and L3 Tenders are used – Scope, Value, and Sectors
- Regular procurement goods: The lowest price bidder is a priority for regular goods procurements, such as electric items, office supplies, or where specifications are standardized.
- Work and construction: Lowest bidding (L1, L2, L3) in construction tenders can be used for smaller value construction or work requirements, where the scope is well-defined.
- High-value work: For high-value, technical, or complicated work, the lowest bidding method isn’t the priority. Especially where technical specifications matter a lot, and quality is important. So, the preferred method will be “QCBS or other”
Top Challenges and Considerations to take in 2025-2026
- Nowadays, the government authority is looking for quality, durability, and after-sales support, which makes the lowest bidding less likely to be considered over QCBS.
- If the L1 doesn’t comply and fails to meet delivery and quality, etc., then they might lose the contract.
- Over time, policy is changing, and some tenders consider quality, technical capability, and experience over the low price. So, it no longer directly prefers the low price only method.
You can check this government PDF to explore more: Model Tender Document Procurement of Goods
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Conclusion
To sum up, understanding L1, L2, and L3 tenders that refer to the lowest bidder’s tender is essential for both individuals and companies. You’ve to be eligible to bid and know the excellent strategy for pricing. Overall, stay updated with tender trends and prepare for strong technical and financial bids to win more contracts.