Tendering is a critical aspect of procurement, serving as a formal process for businesses to secure contracts by offering their goods or services. In Australia, tenders can be broadly categorised into public and private tenders. As anyone regularly involved in the tendering process will know, there are distinct characteristics that differentiate the two, with their own unique sets of rules, expectations, and implications. Identifying these differences is essential for navigating the tender landscape effectively and making informed decisions when identifying the most suitable opportunities for your business.
In this blog:
- What are public tenders?
- Key characteristics of public tenders
- What are private tenders?
- Key characteristics of private tenders
- key differences between public and private tenders
- Implications for Procurement Professionals
What Are Public Tenders? (a.k.a Government Tenders)
Public tenders are procurement opportunities offered by government entities at various levels (federal, state, or local). These tenders are typically published openly, allowing any eligible business to submit a bid. The overarching goal of public tendering is to ensure that government spending is transparent and competitive and delivers value for money to the taxpayer.
Key Characteristics of Public Tenders:
Transparency and Fairness
Public tenders are subject to strict regulations to ensure transparency, fairness, and equal opportunity. All tender processes must adhere to the Commonwealth Procurement Rules (CPRs) and relevant state or territory guidelines.
Detailed Documentation
Public tenders often require extensive documentation. All Suppliers must provide detailed information about their capabilities, pricing, and compliance with specific requirements, such as sustainability, insurance and financial obligations.
Rigorous Evaluation Process
Public tenders are evaluated based on clearly defined criteria. The process is typically thorough and may involve multiple stages, including prequalification, technical evaluation, and financial assessment.
Open Access
Public tenders are usually published on government procurement platforms like AusTender or state-based portals to ensure they are accessible to all potential suppliers.
Legal and Regulatory Compliance
Compliance with legal and regulatory frameworks is paramount in public tenders. Government entities must be confident that their Suppliers will adhere to laws related to labour, safety, environment, and anti-corruption.
What Are Private Tenders?
Private sector companies issue private tenders. These tenders are generally less formal than public tenders and may not be advertised openly. Instead, private tenders are often limited to a select group of pre-qualified suppliers or issued through industry networks.
Key Characteristics of Private Tenders:
Flexibility
Private tenders typically offer more flexibility in terms of processes and requirements. Companies often have wider leniency in being able to tailor the tendering process to suit their specific needs and are not bound by the same level of regulatory oversight as public tenders.
Selective Bidding
Unlike public tenders, private tenders may involve a closed or limited bidding process, where only invited suppliers are allowed to bid for the tender. This selective approach aims to streamline the process and ensures only qualified and trusted vendors are considered.
Negotiation Opportunities
In private tenders, there is often more room for negotiation. The tendering process may include discussions between the Buyer and potential Suppliers to refine the proposal and pricing before a contract is awarded.
Varied Documentation
There is typically a wide and varied scope of documentation required for private tenders. Some may require detailed proposals similar to public tenders, while others may be more straightforward, focusing on key deliverables and costs.
Confidentiality
Many private tenders involve sensitive information requiring both parties to sign non-disclosure agreements (NDAs) in order to protect proprietary data and business secrets.
Summary of the Key Differences Between Public and Private Tenders
| Public | Private | |
| Regulatory Environment | Heavily regulated and must comply with government procurement rules to ensure transparency and accountability | Private tenders are governed by the company’s procurement policies, offering more flexibility |
| Process & Accessibility | Accessible to all eligible suppliers through open tendering | May be restricted to a selected few or ‘invite only’ |
| Documentation & Evaluation | Generally require more extensive documentation and have a more rigorous evaluation process | Can be more streamlined and focused on the company’s specific needs |
| Scope for Negotiation |
Typically a more structured and fixed procedure |
Often allows for greater negotiation during the tendering process |
| Contract Duration | Tend to have longer contract durations and are less susceptible to market fluctuations. Governments typically prioritise long-term commitments and seek reliable partners | Usually shorter, project-based contracts that require companies to consistently seek new opportunities to sustain growth |
| Confidentiality | Usually involve a lesser degree of confidentiality | Usually involve a higher degree of confidentiality |
Implications for Procurement Professionals
2. Preparation and Compliance
For public tenders, thorough preparation and strict compliance with regulations are non-negotiable. In contrast, private tenders may require more emphasis on building relationships and negotiating terms.
3. Resource Allocation
Public tenders often demand significant resources in terms of documentation and compliance. Companies must evaluate whether they have the capacity to meet these demands or if they should focus on the potentially quicker turnaround of private tenders.
4. Market Positioning
Success in public tenders can enhance a company’s reputation, particularly with government agencies, leading to more opportunities. Private tenders, on the other hand, can solidify relationships with key industry players and lead to repeat business.
Whilst there is no lack of things to consider when applying for tenders, hopefully the information above has given you a clear understanding of the unique opportunities and challenges offered by public and private tenders and why it is important for businesses to carefully consider their capabilities and goals to effectively navigate the tendering landscape and secure the most suitable contracts to drive growth and success for their business.
