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Tender process

Explore the different type of tendering and how the tender process works

What is tendering and types of tendering?

A tender is a formal offer or bid from a potential supplier looking to win a contract for works or services, usually submitted in writing, the tender outlines the work or supply of goods or services, at a stated price and under stated conditions.

An invite to tender (ITT) is a request to potential suppliers in respect of execution of work or supply of goods and services. A request to tender is a documentation used to invite tenders, although these can be verbal too.

 

There are four main types of tendering:

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Open tender:

Anyone is allowed to submit a tender to supply goods or services required. This allows an equal opportunity for any organisation.

Selective tender:

Only allows supplier's to submit tenders by invitation

Negotiated tender:

Often used in the engineering and construction industry and involves negotiation with a single supplier

Single-stage and two stage tender:

Single stage tendering is used when all the information is available to calculate a realistic price. Two-stage tendering is used to allow early appointment of a supplier

 

How does a tender process work?

The main objective of the tendering process is to ensure the ‘best fit’ supplier is selected to supply goods or services. It’s also important to have a management team in place to deal with the tender process, to ensure legalities are observed. Selecting tenders isn’t easy, which is why a strict process is laid out.

 

There are five main stages of tendering:

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1. Develop documentation – pre-purchase questionnaire and detailed spec

It’s important to spend time developing the tender documents, including a detailed breakdown of the volume, service level agreement and terms and conditions.

  • Create a detail specification to ensure consistency on pricing, product quality and operations functionality. The specification will form part of the tender document for suppliers.
  • Distinguish in your specification between product requirements and preferences, building in tolerances for suppliers to adhere to

2. Supplier selection to participate in tender

Conduct a Request for Information (RFI) to help you gain insights into suppliers' size, capabilities, financials, strengths and weaknesses.

  • Assessing the criteria can help you determine if they should be included in the tender process and receive a Request for Quotation (RFQ).
  • Ranking the performance qualities against the business needs with key stakeholders will be useful at this stage

3. Issue tender documents

Once you’ve selected the companies to participate, you’ll need to send some formal documents.

  • Send an Invitation to Tender (ITT) and Request for Quotation (RFQ) for selected suppliers to participate.
  • Include the detailed specification and documentation developed around your organisation’s requirements, along with clear timescales to respond.

4. Bid and tender evaluation and validation

Once tenders are submitted, it’s for time for bid evaluation and validation against pre-defined award criteria. This helps to identify which supplier is offering the best value for money.

  • Ensure your tender evaluation is structured, disciplined and transparent.
  • Post-tender negotiation will often take place, along with reference, credit checks and supplier visits.
  • Consider whole life costs, including the removal or disposals of a product.

5. Contract award and implementation

Once the supplier has been selected, you’ll award a contract. This allows both parties to fully understand their obligations and key criteria.

  • Award criteria offers agreed terms and conditions to minimise contractual risks and exposure when doing business
  • Sets out clear timescales for both parties
 

CIPS Contract Management Cycle

Our Contract Management Cycle is used to create a smooth end-to-end process, ensuring optimum scoping, planning, managing, and reviewing are taken place at the right time. Find out more about the Contract Management Cycle.

Quality and measurement key themes

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