What is a tender?

Posted: 21/02/18 09:00

What is a tender_

Understanding tender requests, buyers and suppliers, tenders in contract law and the tendering process gives you a greater chance of a winning bid. Know the system to make it work for you.

Tenders, Buyers and Suppliers

A tender is a formal offer to perform work in return for payment. Payment maybe in the form of a fixed price or via a schedule of rates. Work may include the supply of goods or services or both. To win a tender you should understand the tendering process and what the buyer expects. 

Buyers are the organisations who publish tenders and are looking for responses from businesses who can do the work. They do this with a Request for Tender (RFT). Suppliers are the individuals or businesses that are carrying out the work for the buyers. Suppliers can offer goods, services or both. 

The response is often referred to as Response to Tender and the organisation responding to the tender request as the supplier, or tenderer. The acceptance of a tender typically results in a contract between the buyer and the supplier. This process is referred to as tendering.


The competitive process of tendering

Buyers seek tender responses from multiple suppliers in a competitive process. They evaluate and accept the tender response that best meets their needs and offers the best value for money. This is not necessarily the tender with the lowest price.

Tendering for work is common where the dollar value is high or there is significant risk involved. The tender process is more rigorous than the process used for quotations. Each tender is governed by its own rules and conditions referred to as the Conditions of Tender.

When government or councils 'put out a tender', the government is basically asking for offers to do work on a contract basis. Once the government accepts a tender, it is binding to both the government and the supplier; the successful tenderer.


Type of tender requests

RFT, ATM, ITO, What the...? Tender requests come in many shapes and forms and include the following:

  • Request for Tender (RFT)

  • Approach to Market (ATM)

  • Request for Proposals (RFP)

  • Invitation to Offer (ITO)

  • Invitation to Respond (ITR)

  • Request for Quote (RFQ)

Request for Expressions of Interest (EOI) are not typically tender requests but are the often the first step in the tendering process. See our post on What is an EOI to understand the differences between an EOI and a tender. 


What is the Difference?

The names are different but all requests share similar characteristics:
  • They typically include a description of the buyer's requirements or needs

  • Request information about the supplier's experience, capability and capacity to do the job.

  • In most cases a fixed price or schedule of rates is requested

  • Tender responses are requested from more than one supplier

  • The value of the goods and/or services is often substantial

  • There is a firm cut off date and time for responding

  • The responses are evaluated according to pre-determined criteria

  • A contract is awarded to the successful tenderer/supplier


Tenders in Contract Law

A request for tender is generally regarded as an Invitation to Deal and the response to a tender is treated as an offer in contract law.  If you make an offer via a tender and that offer is accepted, you have an agreement and a legally enforceable contract. A tender is not in itself a contract but may result in a contract upon acceptance. The tender response you submit forms part of the contract along with the tender request and any other communication between you and the buyer.


What is in a Tender Request?

A Tender Request commonly called a Request for Tender (RFT) usually includes the following documents:
  • The conditions of tender: the rules that apply to suppliers and buyers participating in the tender process

  • The form of tender: a form or set of schedules that you are required to complete and submit as part of your tender response

  • The conditions of contract which you will be required to sign if you are awarded the tender

  • Last but not least is the scope of works the organisation would like you to perform

Take the time to read the tender documents carefully and ask the customer questions where you are unsure what is being asked for. 


Tender responses

A tender response can vary from a single page to hundreds of pages depending on the nature and complexity of the tender request. The time provided to prepare a tender response varies from as short as one week to a month or more. The costs of preparing a tender response can be substantial and these costs are borne by you, the tenderer. Before preparing a response, you need to honestly evaluate your chances of winning. See our post on writing a great tender response for help in responding to Requests for Tender. 


Who issues tenders?

Tenders are issued frequently by Local, State and Federal government organisations. Government policy dictates that a tender must be issued above a certain financial threshold. This threshold varies from state to state and ranges from $150,000 to $250,000. Requests for Tender are also issued by private companies for substantial procurement opportunities. 


Why should I submit a tender?

Each year in Australia in excess of 20,000 requests for tender are published on websites like ours, tender portals and in newspapers. It is estimated that government market alone is worth in excess of $30 billion.  These are huge business opportunities which could secure you a repeat customer, provide your business with a step up to the next level and substantially increase your overall business revenue.


Finding tender opportunities

Government tenders alone are published on over 500 websites and in 300 newspapers across the country. To track and obtain all this tender information in a timely manner is close to impossible. That is where Australian Tenders comes in. We source and publish all the tender information across Australia and make it available to you on one website.

If you want to learn more about how we can help your tendering process, just drop us a line via email here. Our tender alert service gives you the competitive edge. We want you to win and we’re here to help you.

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Rob Nathan

Written by Rob Nathan

Rob Nathan founded Australian Tenders in 2009, recognising a need for a reliable, thorough and highly cost-effective tender notification service for Australian businesses of all sizes.


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