A tender is a formal offer or invitation issued by an organization (government or private) to procure goods, services, or carry out a project. It is part of a procurement process in which companies or individuals are invited to submit bids for the supply of these goods, services, or projects.
Key Concepts Related to a Tender:
- Tendering Process:
- Invitation to Bid: The entity that wants to purchase goods or services (or complete a project) issues a tender, specifying the requirements, scope of work, and conditions.
- Submission of Bids: Interested companies or individuals (often called “bidders”) submit their bids, detailing how they would meet the requirements and their price.
- Evaluation: The procuring entity evaluates all submitted bids based on price, quality, capability, and other criteria.
- Awarding the Contract: The contract is awarded to the successful bidder, usually the one offering the best combination of price and quality, or the “lowest responsive bid.”
- Types of Tenders:
- Open Tendering: A process where the tender is open to all eligible participants. This is the most common form, ensuring fair competition.
- Selective Tendering: In this type, only certain suppliers, contractors, or service providers are invited to submit bids, often based on their qualifications.
- Negotiated Tendering: Used in specific cases where only one supplier or contractor is approached, and the terms are negotiated directly.
- Single-Stage and Two-Stage Tendering: In single-stage tendering, bids are submitted once based on the complete tender documents. In two-stage tendering, initial proposals are submitted, after which negotiations or more detailed proposals are requested.
- Common Uses of Tenders:
- Government Projects: Tenders are commonly used by governments to invite bids for infrastructure projects, construction, technology procurement, public services, and more.
- Corporate Procurement: Companies may issue tenders for suppliers to provide raw materials, services, or other resources.
- Components of a Tender Document:
- Scope of Work: Detailed description of the project, services, or goods required.
- Terms and Conditions: Legal and operational terms that the bidders must adhere to.
- Submission Guidelines: Instructions on how and when to submit the bid, including any necessary documentation.
- Evaluation Criteria: Details on how the bids will be assessed (e.g., price, technical expertise, delivery timelines).
- Tender vs. Bid:
- A tender is the process or invitation, while a bid is the offer submitted by the interested party in response to the tender.
- Public vs. Private Tenders:
- Public Tenders: Issued by government agencies and open to a wide audience. Public tenders aim to promote transparency and fair competition.
- Private Tenders: Issued by private companies and may be more selective, with invitations sent to pre-approved suppliers or contractors.
Example:
- If a government issues a tender for the construction of a bridge, construction companies will submit their bids detailing how they will complete the project, their qualifications, timelines, and the cost. After evaluating the bids, the government will award the contract to the company that meets the best criteria (e.g., price, experience, quality).
Tendering Platforms:
- In many countries, tenders are listed on e-tendering platforms where interested companies can view tender details and submit their bids. For example, the Government e-Marketplace (GeM) in India, or platforms like Tender Tiger and Tendersinfo.
Summary:
A tender is a formal process where organizations invite suppliers or contractors to bid for the supply of goods, services, or execution of a project. It is an essential part of procurement to ensure transparency, competitiveness, and the selection of the best offer.