Tender

What it means

A tender is a competition for a contract in which the buyer publishes the conditions and selects from the bids received against criteria set in advance. In the public sector it follows procurement law; in the private sector, rules the buyer sets.

Those pre-announced criteria are what distinguish a tender from an ordinary enquiry. They cannot be changed once bids are opened - and in a private tender that may not be unlawful, but it reliably deters good suppliers next time.

A tender is one specific selection procedure, whereas public procurement is the whole legal framework within which such procedures run in the public sector, from market research to contract monitoring. The term is also confused with an RFP: that is the document with the brief, while the tender is the procedure that starts with it and ends with the choice of a winner.

How it works in practice

Participating in a public tender requires meeting the conditions of participation: integrity, financial and professional capacity, register extracts. Companies receiving public money are also entered in the register of public sector partners, beneficial owner included.

In the private sector an RFP with a clear brief and weighted criteria plays the same role. Before signature comes a supplier audit of the winner, sometimes a deposit or escrow.

When a bid is being prepared, what the client most often needs from us is figures: turnover for recent years, statements filed in the register of financial statements and confirmations of no arrears to the tax office and the insurers. Those confirmations take several days to issue, so we request them as soon as the notice is published, not just before the deadline.

What to watch out for

Underpricing to win is the costliest mistake: you get the contract and deliver it at a loss. Look at the penalties and deadlines too - signing the bid accepts terms that negotiation can no longer change.

A bid bond, and later a performance guarantee, tie up cash or a credit line for months. Anyone who has not planned for it can win the contract and have nothing left to buy materials with, so a bank guarantee has to be arranged with the bank before the bid goes in, because approving it takes time.