Tendering allows buyers to source and qualify businesses in a fair and equitable manner. The process seeks to provide tenderers with the same information, the same response framework and then, assess them on the same evaluation criteria. From preparing to approach the market, to probity checks, to evaluation and the final selection of a supplier, here’s everything you need to know about the tender process.
Buyer preparation
By the time a tender has been released to market, extensive work has already been completed behind the scenes by the buyer. Depending on the type of opportunity, the buyer is likely to have:
- Defined the business need and had a business case approved for going to market
- Conducted an assessment of market capability and determined a procurement approach to secure the required goods or services
- Engaged relevant resources (internally and externally) to participate in the tendering process
- Prepared a scope of works (specification) and determined the level and standard of product or service to be provided
- Prepared an evaluation framework to assess tenderers in order to identify suitable suppliers
- Structured a response format that aligns with the evaluation framework that tenderers are expected to complete
Approaching the market
Information sourcing
Information sourcing is where the buyer has identified a need and is seeking information from the market about the types of suppliers and the types of products or services that are available. Documents can include:
- Expression of Interest (EOI)
- Registration of Interest (ROI)
This stage is often used as a precursor to shortlist a group of select organisations to respond to a formalised tender. It can be used for market-sounding tests or for larger, more strategic, high-value opportunities.
Solution sourcing
Solution sourcing sees the buyer having a fairly defined idea of what they are seeking. They will expect those that respond to have the capability to address the buyer’s need. Documents can include:
- Request for Quote (RFQ)
- Request for Proposal (RFP)
- Request for Tender (RFT)
RFQs are more likely to be used for products and services that are commoditised, price sensitive or have a high number of suppliers in the market, such as stationery, cleaners, and vehicles. RFPs and RFTs include a detailed specification of what the buyer is seeking. They require the tenderer to submit a formal response outlining their ability to meet the requirement. The tender response is your main opportunity to sell your solution, so make sure you’re familiar with these non-negotiables for writing a winning tender response.
Probity checks
Throughout the procurement process, the buying organisation must be able to demonstrate that it has been transparent in its practices. Any form of procurement needs to be documented; the process is subject to audits by special government agencies and open to public examination if they are over a specific monetary threshold.
The probity process can include the appointment of either an internal resource or an external body to act as an independent observer during the tendering process. A probity auditor monitors the behaviour of both the buyer and tenderers and ensures that the rules of tendering are clear, open and well understood, and applied equally to all. Tenderers can also report the behaviour of other suppliers to the probity auditor if they feel the tendering process has been compromised.
Evaluation
Most tender responses must be provided in a format that has been set by the buying organisation, and will often include a request for an executive summary. The format will have been structured to capture key information about the tenderer and their ability to meet the buyer’s requirements. The buyer will likely have prepared an evaluation framework that will be applied against the tenderer’s submission to determine their suitability to move forward to the next stage of the decision-making process.
Evaluation criteria will be structured to assess the tenderer’s capability from a:
- Technical perspective: assesses how well the solution meets the buyer’s specification (experience, qualifications, licences), looks for gaps in the solution or potential risks
- Commercial viability perspective: assesses the financial stability of the business and their ability to provide for the duration of the contract
- Financial analysis perspective: assesses the price of the product or service, addresses any gaps or assumptions in cost
Selection
Post completion of the tender evaluation process, the buyer will have ranked their potential suppliers. With that information, they will then determine who participates in the next stage of the tender process. This could be seeking clarification from a tenderer on elements of their submission, inviting them in to present, or moving them through to negotiations. Tenderers may also be asked to present an adjustment to their product or service’s pricing, or a Best and Final Offer (BAFO). This is another way for the buyer to differentiate between the final few suppliers. Once the buyer has determined the best solution, they will then enter contract negotiations with the preferred tenderer. This will lead to a signed contract and then commencement of services.
Summary
The tender process consists of 5 steps:
- Buyer preparation
- Approaching the market
- Probity checks
- Evaluation
- Selection
If you have any questions about tendering, our team is here to help. You can give us a call on +1800 TENDER, or click here to shoot us a question. For over 30 years, TenderSearch has helped thousands of businesses, across all levels of tendering experience, grow. Will yours be next? We’re ready when you are!
