Tender Notice - Meaning and Procedure - Kailasha Online Learning LLP

Tender is the most common procedure for the procurement of goods as well as services. We come across many tender notices in the newspaper, websites and through other sorts of channels. In this article, we are going to learn about meaning and procedure of tender notice.

Meaning

In simple words, tendering is a procedure to buy or procure any goods or service at the cheapest price and with the best quality. Any organization uses a simple procedure of tendering for the procurement.

Technically notice to invite tenders is a procedure for generating offers from qualified suppliers or contractors (called tenderers), previously assessed for suitability through a supplier questionnaire, in the form of sealed bids for construction or supply of specific and clearly defined goods or services during a specified time period. It is also referred to as a request for tenders or call for bids. An invitation to tender is floated by the government undertaking, financial institution or a big corporation for different projects, when they want to purchase goods on a large scale, hire services or acquire/construct something but they are not able to deliver it on their own. For this purpose, third party suppliers are invited to bid and submit tenders.

The procedure for inviting tenders involves the following steps

Decision regarding the requirement as well as the method

The organization requesting tender will determine the type of tender that will be used as well as what will be involved in the tendering process. There are four main types of tenders:

Open tendering, which is open to all qualified bidders and where the sealed bids are opened in public for scrutiny and are chosen on the basis of price and other specific measures such as time.
Select or restricted tendering, which is open to selected contractors, sellers, or vendors who have been pre-qualified through a screening process.
Multi-stage tendering, used when there are a large number of respondents. At each stage, the suppliers/contractors are culled to those who are most suited for the specific requirements.
Invited tendering, wherein selected suppliers/contractors are invited directly and requested to submit the bid for the particular item/work. It is generally used for specialist work, emergency situations or for very low/high value, low risk or off the shelf options.

Along with the notice to invite tenders, tenders can be issued through the use of, Expressions of Interest (EOI), Request for Information (RFI), Request for Proposal (RFP) and Request for Quotation (RFQ).

Preparation of tender notice

The tender notice or notice inviting tender outlines

what is required,
the contractual requirements and
the method by which the tenderers have to respond.

Tender request documents vary from organization to organization but common elements of tender request documents include:

Description of the goods and services to be procured:

This will include what the work will involve, and any technical specifications or details relating to requirements, deliverables or outcomes of the project.

Conditions of tender:

This stipulates the terms and conditions that must be met in order to be considered for the project or contract. There may be technical qualifications, experience, safety requirements, licensing, legal or financial conditions that ought to be met in order to be eligible.

Evaluation criteria:

This outlines how the submitted bids will be assessed and evaluated. This should be adhered to and used as a guide when preparing a tender submission.

Submission content and format:

Details may be provided on how one should present your submission. There may be specification relating to the length of submissions, file format, presentation, etc.

Process rules and information:

This may include things such as the deadline for submission; where and when it should be submitted, what should be included in the submission, for example, pricing information or schedule, and person(s) to contact for clarification, etc.

Conditions of Contract:

This may indicate the general or standard terms and conditions of the contract, with additions or alterations made when a winning tender is announced. This should also include any non-standard terms and conditions- these should be highlighted within the tender documents.

Tenders are invited

The value, complexity and business category determine how tenders are invited.

There are a number of sources that can be monitored to find out about the current and future tendering opportunities. The tenderers will need to identify organizations and agencies likely to need their products. Close or regular contact with such organizations will help them to find out if there are any future tender opportunities likely to open up. Registering with tender information service providing websites can be another way for the tenderers to keep track of what opportunities are available in the tendering market.

Response by the suppliers

The tenderers should first obtain all the relevant information. After attending any pre-tender briefing sessions, clarifying any uncertainties, planning and preparing their response, the tenderers should submit their response in the right format, within time and at the right place.

Evaluation and Selection

Each submitted tender will be checked for compliance, and if compliant, then evaluated against the criteria specified in the tender documentation and also on the basis of their strengths and weaknesses. The tender best suited, offering the best value for money will be chosen.

The criteria for evaluating the tenders is referred to in the Request for Tender or the Tender notice documents.

The tender will be said to comply with all the requirements of the tender document if it complies with any conditions of participation, has been lodged on time, it’s documents have been signed as required and it meets all other mandatory requirements.

If any of the above requirements aren’t fulfilled then the tender is deemed to be non-compliant and is excluded from further consideration. Otherwise, it will proceed for further consideration.

The criteria on the basis of which the tender will be evaluated are:

The technical merit of the proposal.
The capability of the tenderer’s business to fulfill the requirement including technical and management competence, financial viability and relevant experience.
The relevant skills, experience, and availability of key personnel,
Quality assurance requirements, and
The risks or constraints associated with the offer

Many organizations, include Government agencies also assess tenders based on ‘value for money’. It surely is an important factor but not the only one. The major driver for the tender is money/cost in most of the cases however sometimes the primary driver can be time or quality. The submitted bids are assessed by keeping the primary driver of the procurement in mind. For e.g., if quality the primary driver i.e. quality is the most important factor for the procurement then that contractor will be selected whose quality assurance is more reliable irrespective of the bid price. Later the bid price can be negotiated further.

Once the evaluation process is complete, a tender will be selected and notified of their successful tender. Other tenderers are notified of their unsuccessful submission.

The successful tenderer will be awarded a contract. Terms and conditions of the contract are usually outlined in the invitation or Request for Tender documents, as well as incorporating specifications from the tender submission. In certain circumstances, some final negotiations may occur before the contract is signed and finalized.

Notification and debriefing

When a contract has been awarded, the successful tenderer will be advised in writing of the outcome. Unsuccessful tenderers are also advised and offered a debriefing interview.

Contracts established and managed

Generally, a formal agreement will be required between the successful tenderer and the relevant agency. Once the successful tenderer has been notified and awarded the contract, it is important to meet all requirements and manage the contract effectively. Usually at the time of awarding of tender, letter of intent (LOI) is given to the contractor to start the work and later within one or two months, formal work order is issued to the contractor or bidder.