What is a tender?

A tender is a structured procurement process used mainly by governments, semi-governments and large companies to outsource contracts or projects to external parties. The purpose of a tender is to ensure a transparent, fair and competitive process in which the best party is selected based on predetermined criteria such as price, quality and sustainability. Tendering ensures that the allocation of contracts is not done randomly, but through an established procedure.

What does competitive bidding entail?

In a tender, the contracting authority - for example, a government organization - invites companies to bid for a particular contract. The contract can range from supplying goods to carrying out major infrastructure projects. The procurement process consists of several steps that must be closely followed to comply with laws and regulations, especially in government procurement.

The process begins with the publication of a tender, often through platforms such as TenderNed in the Netherlands, where details of the contract are described, including the conditions that bidders must meet. Companies that are interested then submit a tender, which is evaluated based on award criteria. The best tender is selected for the contract.

Why are tenders used?

Procurement is used to ensure the efficiency, fairness and transparency of the procurement process. In public procurement, this is even required by law to prevent corruption and cronyism. Procurement ensures that:

• Equal opportunity: All companies, large and small, will have the opportunity to compete for the contract.
• Transparency: The process is open and transparent, ensuring the integrity of the allocation.
• Competitive pricing: Through the competitive element, clients get the best value for money.

Different types of procurement

There are different types of procurement, each with its own characteristics and procedures. Here are some of the most common:

Public procurement:

In an open tender, any interested party may submit a bid. This type is completely transparent and ensures that everyone has a chance to compete.

Non-public tender:

This involves first a selection round in which interested parties can qualify. Only the qualified parties are then invited to submit a bid. This ensures a more manageable selection of providers.

Competitive tendering:

In a negotiated tender, a limited number of parties are directly invited to submit bids. This type is often used for smaller contracts or in situations where time is a crucial factor.

Competitive dialogue:

This type of procurement is used in complex projects where the exact requirements have not yet been fully worked out. The contracting authority enters into dialogue with selected providers to jointly find the best solution.

What is the difference between a tender and a tender?

Although the terms procurement and tender are often used interchangeably, there is an important difference. A tender is specifically a government-regulated process bound by strict rules and laws. A tender can be viewed more broadly and is used not only by the government but also by private organizations. Both processes aim to select the best party, but tenders have more legal obligations and procedures.

Award criteria in procurement

A crucial part of the procurement process is the award criteria. These criteria determine the basis on which tenders are evaluated and can range from lowest price to best value for money(EMVI). Award criteria can also include other factors such as sustainability, technical ability, and innovative capacity of the bidder.

Examples of award criteria are:

• Price: The lowest price can be a decisive criterion, especially for simple contracts.
• Quality: This criterion looks at the quality offered and how well it matches the contracting authority's specifications.
• Sustainability: Increasingly, sustainability is being included as a criterion to encourage environmentally responsible business practices.

Benefits of tendering

1. Tendering offers several advantages for both the contracting authority and the bidding parties:
2. Fair competition: tenders ensure that all bidders have an equal opportunity and that selection is based on objective criteria.
3. Quality assurance: Setting clear requirements for bidders will ensure a high level of quality.
4. Transparency and accountability: The process is open and documented, which ensures accountability and prevents malpractice.
5. Cost savings: Competition creates better prices and terms, often resulting in cost savings for the contracting party.

Conclusion: What is procurement and why is it important?

Procurement is an essential process in the public sector and large corporations to award contracts to the best bidders in a fair, transparent and efficient manner. The procurement process plays a crucial role in promoting equality in the market, encouraging innovation and ensuring value for money in the implementation of projects. It is very important for companies wishing to participate in tenders to thoroughly understand the rules and requirements and prepare thoroughly for the bidding process.