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.
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.