What is tendering?

Tendering is the process by which companies or organizations submit a formal bid to participate in a competition for a contract or project issued by a contracting party, such as a government or large corporation. The purpose of tendering is to select the best bidder based on criteria such as price, quality, and sustainability. Tendering is especially common for large and complex projects, such as construction projects, IT services, and government contracts.

How does tendering work?

The tender process begins when a contracting authority decides to open a contract for bids. This is done through a tender invitation that details the requirements, criteria and conditions of the project. Interested companies can then submit bids that meet these specifications.

The process of tendering consists of the following steps:

Publication of tender:

The contracting party publishes the tender on a public platform, such as TenderNed or Negometrix, where details about the contract are shared. This often includes the technical specifications, deadlines, and evaluation criteria.

Preparation for enrollment:

Companies wishing to participate in the tender prepare a bid. This includes a detailed bid, a plan of action, and possibly references or proof of previous successful projects. The tender must meet the set criteria to have a chance of winning.

Review of entries:

The contracting party evaluates all submitted bids based on the predetermined award criteria. This can range from the lowest price to a combination of price and quality, known as the Economically Most Advantageous Tender(EMVI).

Award of Contract:

After evaluation, the contracting party chooses the tender that best meets the criteria. The contract is then awarded to the winning bidder, who is responsible for executing the project as agreed.

Contract signing and execution:

After the contract is awarded, a contract is drawn up and signed by both parties. The performing party then begins the work according to the specified terms.

Why is tendering used?

Tendering is used to make the selection process fair, transparent and competitive. This has several advantages:

• Transparency: The tender process is public and transparent to all stakeholders, ensuring the integrity of the award.
• Competition: Having multiple parties compete for the contract creates competition that often leads to better prices and innovative solutions.
• Equal opportunity: Tendering gives all companies, large or small, the chance to compete for contracts based on objective criteria.
• Quality: The process ensures that not only the cheapest, but also the most qualified party wins the contract.

Types of tendering

There are different forms of tendering, each with specific characteristics and areas of application:

Public tender:

This is the most common form where any interested party may submit a tender. The process is completely transparent and provides an equal opportunity for all participants.

Non-public tender:

Non-public tenders first involve a selection round in which only qualified parties are invited to submit bids. This type of tender is often used for complex projects.

Negotiated tender:

In this, the contracting party invites a select number of parties to compete for the contract. This is usually used for smaller projects or rush orders.

Competitive dialogue:

This type of tender is used for complex contracts where the precise requirements are not yet fully determined. The contracting authority enters into discussions with the bidders to find the best solution.

What is the difference between tendering and procurement?

Although the terms tendering and procurement are often used interchangeably, there is a difference. Tendering is the broader process in which a contract is opened up for bids, usually by a public organization. Tendering refers specifically to the submission of a bid by an interested party to participate in that process. In other words, the contracting authority puts out a tender, and companies that want to compete tender.

Award criteria in tendering

An important part of tendering is the award criteria that determine which bid wins the contract. The most commonly used award criteria are:

• Lowest Price: The bid with the lowest price wins, provided all requirements are met.
• EMVI (Most Economically Advantageous Tender): This not only considers price, but also other factors such as quality, sustainability and innovative capacity.
• Quality: This criterion can include aspects such as technical competence, experience and plan of action.

Advantages and disadvantages of tendering

Advantages:

• Objectivity: Decisions are made based on predetermined criteria, ensuring objectivity and fairness.
• Innovation: Competition encourages companies to provide innovative solutions.
• Cost savings: Tendering can lead to better prices as suppliers compete.

Disadvantages:

• Complexity: Tender processes can be complicated and time-consuming, especially for large projects with stringent requirements.
• Cost to bidders: Preparing a bid can require significant time and resources with no guarantee of success.

Conclusion: What is tendering and why is it important?

Tendering is an essential process for organizations looking for the best partner for their projects. The tendering process allows companies and governments to select the best party in a structured and transparent way. The process promotes competition, encourages innovation and ensures that contracts are executed at the best value for money. For companies participating in tenders, it is important to understand the process well and prepare carefully in order to successfully tender.