The Generic Tendering Process

When you buy products and services for your organisation, it is better to be able to choose from a number of suppliers. This way you are more likely to obtain products that meet your requirements while achieving good value for money.

Once you have established what it is you want to buy you are ready to ask companies if they wish to be your supplier and at what price. In a formal procurement process, there are two ways to call for bids: invitations to tender (ITT) and requests for quotation (RFQ)

Both are used to obtain offers from suppliers, but they are conducted in different ways. Invitations to tender are usually a more formal process and are widely used in the public sector, which sets guidelines to be followed on certain value contracts. There are usually clear guidelines in public procurement often enshrined in law and advocating princinples of fairness and transparency. RFQs are better suited to products or services that cost less and where the requirements are standardised or produced in repetitive quantities.

This section focuses on invitations to tender.

A tender is a document you send to potential suppliers inviting them to supply products or services to your organisation and providing a bid price for the work. Writing and sending out the document is called tendering.

Tendering takes more time than simply getting a quotation. This is why it is more appropriate for:

High value contracts
Long-term contracts
Complex goods and services
Where there are a number of competent suppliers

Tendering documents have lots of information for potential suppliers, including:

Information about your organisation
Specifications for the product or service you wish to buy
Service level agreements
Terms and conditions of the contract
Deadline for submission of the bids.

There are two types of tendering:

Open tendering: one-stage process where any supplier can respond to your tender document. This may get lots of responses, giving you many options.
Restricted tendering: this is a two-stage process involving a selection or Pre-Qualification Questionnaire, or PQQ. Bidders shortlisted after the first stage take part in the second round. This form of tendering usually gets a lower number of responses. This is because the PQQ helps to eliminate suppliers who do not meet all the requirements.

The tendering process is easier to understand if you break it down into four stages:
Tendering process 4 stages

Prepare: Teamwork is important. When you create the tender documents, work with other departments in your organisation to get all the information you need. This can range from technical drawings to packaging.
Process: Treat all suppliers equally. They should all have the same amount of time to prepare their bids. Responses that arrive after the deadline should be disregarded. Answer all requests for additional information submitted by suppliers, these should be shared with all potential tenderers.
Evaluate: Set up a team within your organisation to review the bids and agree a time to do it. Involve colleagues with a range of expertise. Remember that you are looking for cost-effectiveness and good value for money for your organisation. This is not necessarily the cheapest.
Award: Once a decision is agreed and the successful bidder is notified, you can award the contract. Once the contract has been signed with the supplier, inform those who were not successful and explain the reasons why.

Once a contract is signed the supplier cannot change their offer without your permission.

Tendering is an effective process to help you make the right choice of supplier, and will give you the information to understand and demonstrate how you arrived at this decision. Knowing what worked well but also what could be done better will help you next time you place an order with a supplier. As a final note it is always good practice to retain documents that provide an audit trail of your decision making.

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