Tendering, procurement, approaches to market, expressions of interest, proposals, quotations, these are all words used frequently when tendering, but it is not always clear how the processes fit together. As a supplier, tendering is the process you are probably most familiar with – you have seen a tender, responded to it, and hopefully been awarded the contract. However, to be consistently successful when tendering, you must know the full process from start to finish.
The Procurement Process
You may be surprised to hear that tendering is not the complete process, rather tendering is merely one element of the procurement process. The "Procurement Process" involves all activities relating to obtaining the goods or services and is different for every organisation. Procurement is the process the buyer goes through and includes the need identification prior to going out for tender, as well as the post-tender process activities. The end of the procurement process is usually marked by contractor payment. The "Tendering Process" is steps 5 & 6 of the procurement process: The approach to market and the evaluation & selection of suppliers. In this month's blog, we deep dive into each step of the procurement and tender processes.
Step 1: Need Identified
Let us look at a company as an example. Sarah works at a company that leases office spaces out to other businesses. They have recently put grass in the common break area of the building; however, Sarah has now identified a need: They are going to need a contractor to mow the lawn.
Step 2: Early stages planningThe organisation then begins the early stages planning for the procurement process. This involves setting their objectives, outlining specific requirement to fill the need and consulting with stakeholders in the process.
If we think of Sarah, at this stage she would begin consulting with her department, establish the objectives and receive approval to begin a procurement process. Thankfully, her boss agrees, and she can start preparing their approach to market. This stage may also include setting the procurement budget. A number of organisations publish their budgets, and even publish their forward procurement schedule (otherwise known as a "pipeline").
|
|
Step 3: Determine the method of procurementTo prepare to go out to market, an organisation must define the scope and requirements (if this has not yet already been determined). After that, it is time to define the method of procurement. There are 6 methods of going out to market:
1. Open tendering (or "competitive bidding): Bids can be responded to in open competition, the opportunity is publicly available, and anyone can respond.
2. Restricted tendering (or "invited tenders”): Buyers will invite suppliers to apply for the tender. Only people on this invitation list may respond.
3. Request for proposal (RFP): A broader procurement method that allows the responders to detail the solution to the buyer’s problem. An RFP may not have a clear specification and focuses on the proposal of solutions.
4. 2-Stage Tendering: In this method, there are two approaches to market, the first in a Request for Information (RFI) or Expression of Interest (EOI) format, and the second as the full technical proposal (usually as a restricted tender to those that were part of the first stage)
5. Request for quotation (RFQ): For lower-valued goods or services, this is the least complex procurement method.
6. Single-Source: A non-competitive procurement method where only one provider is contacted to provide the goods or services.
|
Step 4: Prepare to approach the market
Sarah has decided to take an open tender approach for her mowing needs, to give any business an opportunity to respond, and ensure she gets the best price. She now must draft her tender documents to go out for tender. She identifies that she needs the following documents in her tender:
- Specification: Which must clearly outline the needs and criteria, identify industry standards and any project information necessary.
- Evaluation Criteria: Outlining the method the organisation will use to evaluate the tender responses. The evaluation model must be selected within this, outlining how the criteria will be scored/measured.
- Tender Response Template/Schedule: A form to attach to the documentation where the suppliers can fill out the information you require for evaluation.
- Policies: Any relevant policies (whether that company policy or pre-existing)
- The Draft Contract: Create the first draft of the contract ready for awarding the tender.
Sarah will then compile all these documents and any other communication required, ready to approach the market!
Step 5: Approach the Market
If we look back at Sarah, here she would reach out to tender platforms like Australia Tenders and begin advertising her opportunity.
Step 6: Evaluation & Selection
Government tenders typically use a panel to evaluate tender responses. They usually begin by identifying which tender responses are "conforming" or "non-conforming". For example, if you failed to provide all the information requested in the tender, then your response could be classed as "non-conforming" and never be fully evaluated.
Step 7: Goods/Service Transfer
The Tender Process
The Tender Process is steps 5 and 6 of the procurement process. It usually begins when the buyer has approached the market.
Step 1: The tender opportunity has been releasedAfter preparing the tender documents, the buyer formally issues the tender documents and asks for responses.
The closing date for responses is usually within weeks of the tender being issued. This turnaround could be very short notice if you were previously unaware of the tender. That's why tender platforms such as Australian Tenders can help, as you can learn of tenders before their release using our "Future Tenders" feature or as soon as they are published with our tender notifications. Once the tender is released, a supplier will register with the issuer of the tender and download the tender documents. This registration process allows issuers to send you addendums and reach out to you once you have submitted your tender response. Take Daniel, for example. Daniel owns a local lawnmowing business and has been looking for new work opportunities for the last few months. Daniel receives Lawn Mowing tender notifications from Australian Tenders and has been alerted about a new tender “Provision of Mowing Services”. This is Sarah’s tender!
|
|
Step 2: To bid or not to bid?One of the most critical questions a supplier can ask themselves during the tender process is whether to bid or not bid on a particular tender. Suppliers must determine whether they are a valuable candidate for the opportunity and whether it is worth the time and resources the tender process takes. Read more about the bidding question here.
|
Step 3: Prepare a tender response
At the outset of the tender being published, you will have the opportunity to ask the buyer questions about the opportunity. You may be invited to attend a briefing session or a site visit. These sessions may or may not be compulsory, but it is always recommended you attend. The knowledge gained from these visits are invaluable, and you get the opportunity to meet the buyer and identity competitors. The period for questions and briefings is very short, and the deadline is strict, which is why it is even more important to be on top of tender opportunities being released.
Writing a tender response can be a time consuming, complicated and costly process, but we have so many resources to help equip you for tendering. Check out some of our other blogs, if you're looking for assistance with writing your tender response. It’s important to make sure you leave lots of time for drafting and proofreading your response.
Daniel has determined that he wants to bid on this tender and begins drafting his tender response. As Sarah has attached a tender template/schedule to the documents, all Daniel needs to do is answer every question in the template and attach any additional documents that have been requested.
Step 4: Submit your tender response
Step 5: Tender Evaluation
Keep close to your phone and email as the buyer may have questions about your response or wants to offer you an interview or presentation opportunity. This is why, when downloading tender documents, you must register on the buyer’s portal. This means you’ll get access to any forums, or the buyer can contact you directly to ask these important questions.
Step 6: Tender Awarded
Step 7: Contract Negotiation
- Terms of payment
- Warranties and guarantees
- Completion dates
- Maintenance/Service Levels
- Repairs or after-sale services
Step 8: Contract Signature
What's Next?
Now you know more about how tendering fits into the procurement process, what’s next? Australian Tenders has a range of resources to help you through the tendering process. If you need help with tender writing, or would like to speak with a tender consultant, check out our resources.
Ready to start tendering? Check out our subscription plans to start receiving tender notifications and access to our future tenders now.
