A tender is a proposal that offers to provide goods or services for a particular price and for a fixed period. The organization identifies the needs, specifies the tender requirements, evaluation criteria, and the most suitable type of tender. Some organizations use prequalification to define qualified tenderers. An Invitation To Tender will be sent to the tenderers to invite them to submit a formal and detailed offer to supply the required services or goods. Tender proposals that received before the deadline will be evaluated. Organization will hold a meeting with the potential tenderer before the final selection. The tender will be awarded to the best value-for-money tender proposal.
Specifying Tender Requirements
Conducting an effective and efficient tender process requires good preparation and planning. The organization needs to determine a clear procurement objective, understand the nature of the supplier market, and develop a tender strategy for market engagement as it is the best way to reach out to potential tenderers and ensure competition and contestability. Tender planning and the timeline of procurements will vary according to the situation. The organization needs to review the procurement progress scheduled dates from time to time and try to stick to them as much as possible. The organization needs to define the important points such as the general requirements and specifications, the appropriate type of tender, essential requirements, tender regulations, evaluation criteria, type of contract, and the tender procedure.
Prequalification is an initial selection process to screen the vendors based on a set of pre-determined standards to ensure the vendors have the ability and meet the required baseline to provide goods and services. The vendors that fulfil the prequalification criteria will be invited to submit the tender proposals. Prequalification helps to reduce the administrative burden and risk of contract failure, streamline and simplify the supplier selection process, and lower the risk and cost. An organization often uses prequalification if the purchase incurs a higher amount, the risk of the project is high, or when there is a large pool of vendors to choose from.
There are several types of tenders used in the market. The organization will select the type of tender based on the nature of the contract. In an open tender, everyone has an equal chance, any company is allowed to submit a tender. Hence, an open tender has the greatest competition among the tenderers, and it offers new opportunities for new vendors. The evaluating and awarding processes take longer as they often require a pre-qualification questionnaire (PQQ) and a more comprehensive tender response to be returned. A selective tender is more restrictive as it allows only the eligible vendors to submit a tender. Selective tendering is more suitable for complex or specialist contracts. The process of the selective tender is faster and the cost is lower compared to the open tender as it eliminates the pre-qualification requirements and directs the vendors to the main tender. The selective tender can be either single-stage or two-stage. A negotiated tender is used when there is only a single supplier who is well suited for a specialized contract or to extend an existing contract. Negotiated tenders are widely used in the construction and engineering industries. An invitation to tender (ITT) is the first step in tendering. It is a formal procurement document sent by the organization either via email, by mail, or through an online portal, to invite the vendors to submit the tender proposal. ITT will consist of an invitation letter, a tender form, a scope of work, specifications, timelines, tendering procedure, and evaluation criteria.
Receiving and Appraising Tender Submissions
The vendor will submit a tender proposal that consists of a tender return slip, company background, a complete proposed technical specification, pricing proposal, and other documents required by the organization. A Tender Opening Committee will take charge of the tender opening. Tender proposals will be accepted by the committee only if they are submitted before the deadline specified in the ITT. Any late tender will be rejected, and the tender documents will remain unopened. The tender received will be opened in the presence of the tenderer or appointed representatives. The tender proposal will be rejected if it does not meet the requirements. No amendment is allowed. In the single-stage one-envelope bidding procedure, the vendor will submit the price proposal and the technical proposal in one envelope. In the Single-Stage Two-Envelope Bidding Procedure, the vendor will submit two sealed envelopes that contain a technical proposal and a price proposal. Both proposals are enclosed in a single outer envelope. Only the technical proposals will be open and evaluated after the deadline of the tender, and the price proposal will remain unsealed. Proposals that do not meet the tender specifications will be rejected. The price proposals will be opened in public and evaluated if the technical proposal is passed.
In the two-stage bidding procedure, the vendor will submit a technical proposal. The committee will evaluate the technical proposal. Any inadequacy, unnecessary provisions, or inadequate technical features will be pointed out to the vendors, and they will be allowed to revise the technical proposal according to the organization’s requirements. The vendors will be invited to submit a price proposal after their technical proposal is approved, while those vendors that are unable to meet the technical requirements will be denied.
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