TheTaxHeaven Dictionary - Know the meaning of tax

Tender - Definition & Advantages of Tender | What is a Tender?

What is a Tender? 

A tender is an invitation to bid for a project or to supply goods or services at a stated price. It is mainly used by organizations and governments for procurement when the project's value is high or transparency is needed. 

Tender Procedure 

The tendering process includes the following steps: 

  • Tender Announcement: A public call for tenders is made by the organization needing goods or services.
  • Tender Documentation: Prospective bidders are given detailed documents about project requirements and evaluation criteria.
  • Pre-Bid Meeting: A meeting may be held to address potential bidders' questions or concerns.
  • Submission of Tenders: Bids are prepared and submitted by interested parties before the deadline.
  • Evaluation and Selection: Tenders are reviewed based on set criteria and the most suitable bidder is chosen.
  • Awarding the Contract: The successful bidder is informed and the contract is granted.

Primary forms of tender 

The four main types of tenders used in procurement are: 

  • Open Tender: This is publicly advertised and any interested party can participate.
  • Restricted Tender: Only pre-qualified bidders are invited to participate.
  • Negotiated Tender: The organization conducts direct negotiations with a select group of bidders.
  • Single-Source Tender: This is used when there is only one possible supplier or contractor.

Characteristics of tenders 

Tenders have several features: 

  • Formality: Tenders follow a structured process to ensure fairness and transparency.
  • Competition: Tenders promote competition among bidders.
  • Documentation: Tenders require detailed documentation to give a clear understanding of expectations.
  • Evaluation Criteria: Tenders are assessed based on set criteria to select the most suitable bidder.

Advantages of tendering 

Tenders provide several benefits for both the issuing organization and the bidders: 

  • Fair and Transparent: Tenders ensure equal opportunities for all bidders.
  • Competitive Pricing: Organizations can compare different offers through the bidding process.
  • Quality and Expertise: Tenders enable organizations to assess the technical skills and capabilities of bidders.
  • Standardization: The tendering process follows a standard framework, allowing efficient procurement management.
  • Opportunities for Small Businesses: Tenders allow small and medium-sized businesses to compete with larger firms.