Realistically, how many different types of tendering procedures can there be? Well, there are actually a number of methods that buyers can use to procure services. It might seem unnecessary to overly complicate the tendering process. However, with so many different types of contracts available, one size can’t fit all.
If you’re feeling overwhelmed by potentially encountering so many different procedures, fear not! In this blog, we will guide you through the various types of tendering that you will most likely come across.
1. Public sector tenders
The majority of tendering opportunities are published by public sector departments. This makes sense because publicly funded bodies must spend their money fairly and wisely. These organisations must create a fair and level playing field for potential suppliers to compete.
Examples of public sector tenders include:
Contract: Implementation of a Community Engagement website – Hart District Council
Buyer: Hart District Council
Contract: User Experience and Design Capability
Buyer: NHS Test and Trace
Contract: Commercial Agreement for the Provision of Employment and Health Related Services (CAEHRS)
Buyer: Department for Work and Pensions
Contract: Enfield Cluster Cleaning
Buyer: George Spicer Primary School
Contract: AOC Major Refurbishment Works at Hellesdon
Buyer: East of England Ambulance Service
Tendering for public sector contracts can be a prosperous avenue for generating income for many businesses.
The advantages of public sector tendering include:
Increased chances of finding a suitable tender due to the sheer volume of opportunities that are published.
Guaranteed pay due to the regulations that public sector organisations are bound by, such as the Prompt Payment Code.
An efficient way to build your portfolio and experience as you work your way up to delivering larger contracts.
Access to buyers that you may not ordinarily get to work with.
When social distancing is necessary, tendering is a way of generating new business without the need for face-to-face meetings.
2. Open tendering procedure
Within the public sector, there are many types of tendering procedures, one of which is open tendering. This process is commonly used when procuring goods or services that are considered to be “straightforward”. When a buyer creates an open tendering procedure, they are allowing any business to bid for their contract. The process would look something like this:
Step 1: An ITT is released
When their buyer releases their invitation to tender (ITT), any prospective supplier can respond. The ITT will be published in the public domain and interested parties can respond to the specification. Each supplier will be submitting tender responses that they believe sell their business.
Step 2: The contract is awarded
After evaluating the bidder’s responses, the buyer will award the most economically advantageous tender (MEAT). The buyer will have placed an evaluation weighting on the prices quoted vs the quality of the written responses.
Of course, the buyer may choose to include steps such as site visits or requiring a presentation from potential suppliers. However, overall, the open tendering procedure allows any business to bid for the opportunity to deliver the contract.
3. Restricted procedure
In contrast, a restricted procedure may be used if the buyer is procuring more complex goods/services. They will want to shortlist the bidders to ensure that all the finalists can deliver the contract. The bidder’s capabilities will firstly be assessed before inviting final bids. This type of tendering process could look like this:
Step 1: The buyer releases a PQQ
A pre-qualification questionnaire (PQQ) would be released for interested businesses to complete. At this stage, anyone can fill out the questionnaire. It’s important to note that this stage could have a variety of names such as an SQ or PAS91. The PAS91 is the construction industry’s version of a PQQ but essentially, they all deliver the same result. The pre-qualifying questionnaire is designed to shortlist eligible suppliers. Here, you can expect to be asked for details of your:
- Company’s turnover
- Qualifications or required accreditations
Step 2: The ITT is issued to eligible businesses
Once the buyer has assessed the questionnaire responses, they will be able to shortlist eligible businesses. These companies would then receive their ITT documents.
Step 3: The contract is awarded
After evaluating the ITT responses, the contract would be awarded to the most economically advantageous tender.
4. Competitive dialogue
A competitive dialogue is a type of tendering process that is used if buyers need more information about their solution. Sometimes, buyers will have identified a need for goods/services but they’re not sure of ins and outs. This process would look like this:
Step 1: A PQQ is published
Buyers will ask interested suppliers to answer a pre-qualifying questionnaire in order to shortlist the eligible businesses. This is similar to the restricted procedure at this stage in the process.
Step 2: An invitation to participate in the dialogue
Once the buyer has shortlisted the eligible organisations, they will invite them to a competitive dialogue process. During this time, prospective suppliers can discuss aspects of the project and discuss solutions. The buyer can allow the dialogue to continue until solutions have been identified that meet their requirements. Essentially, this is an opportunity for the suppliers to influence the solutions being procured.
Step 3: Closing the dialogue and inviting tenders
When the buyer is satisfied with the proposed solutions, they will close the dialogue. Once closed, only limited further clarifications are permitted. The buyer will then issue the invitations to tender.
Step 4: Awarding the contract
In the same way as the above procedures, the buyer will evaluate the final tenders and award a supplier.
5. Negotiated tendering procedure
A negotiated tendering process does what it says on the tin. The process will follow these steps:
Step 1: A pre-qualifying process
In this type of tendering procedure, buyers will ask for a PQQ to be completed before the second stage.
Stage 2: Negotiation
After the suitable suppliers have been shortlisted, they receive an invitation to negotiate. Unlike the above procedures, there are no clear rules as to how long the negotiations should take place. There is no formal end to the process before the contract is awarded. Sometimes, negotiations can continue after the preferred supplier is appointed.
6. Innovation partnership
This type of tendering procedure was introduced in 2015. It’s used when the buyer has a need for a solution that isn’t currently available on the market. In this case, the buyer would need to work collaboratively with suppliers to develop the product or service. Then, they can procure the resulting supplies or works. In practice, this process usually works in the following way:
Step 1: Call for competition
Using the innovation partnership procedure, any business may submit a request to participate in response to the call for competition. In order to help suppliers decide whether or not they can provide a solution, the buyer must:
- Identify their need for the goods/services that cannot be procured from the market currently.
- Indicate the minimum requirements that must be met by all bidders.
Step 2: Shortlisting
Once the buyer receives the requests to participate from the interested parties, they can shortlist the bidders. The buyer must choose at least three suppliers to make the next phase a genuine competition.
Step 3: Developing the solution
The buyer will then enter into the development phase with the chosen bidders. The successive phases are typically well structured and after each phase the buyer may decide to either:
- Terminate the innovation partnership, or
- Reduce the number of chosen partners.
Step 4: Awarding
Tenders must be awarded on the basis of the best price to quality ratio.
7. Private sector tenders
Privately owned organisations can also choose a type of tendering exercise to outsource goods/services. However, they are not bound by the same regulations as the public sector. There isn’t anything stopping private sector businesses from choosing a supplier just because they know them or they’re the cheapest.
They’re also not bound by as many rules regarding payment and these types of opportunities can be difficult to find. Private organisations don’t have to publish their tendering opportunities. They can simply send them to the businesses they want a proposal from.
Finding different types of tendering opportunities
Keeping track of all these different types of tendering opportunities can be a full-time job. That’s if you’re not using an efficient tracking process.
There are many tender tracking systems on the market to help you find tendering opportunities. But there is a fatal flaw in them. They rely on the accuracy of common procurement vocabulary (CPV) codes.
In theory, every buyer should categorise their tender with the correct CPV code. However, with so many codes floating around, it’s too easy for them to be inaccurately used.
What does this mean in practice?
For example, a construction company could sign up and pay a tracking system to send them construction tender notifications. Instead, they could receive obscure notifications for the supply of baked beans or irrelevant tenders for website design.
After conducting research into the use of CPV codes, we found that a third of tenders are incorrectly categorised. To combat this, we made our own tender tracking portals.
Hudson Discover houses our 11, sector-specific tendering portals. Instead of relying on CPV codes, we use manual tracking. Our team of Opportunity Trackers sift through thousands of sources every day so that you don’t have to.
How to secure the contract
Hopefully, this blog has cleared a few things up. However, we understand that tendering for work can be a time-consuming process. Should you need any support, don’t hesitate to get in touch.
Our team here at Hudson Succeed have over 40-years’ experience in bidding for work. Our Bid Writers proudly hold an 87% success rate. They are also multi-disciplinary Bid Writers. Their experience spans across various types of tendering procedures and numerous industries, including:
- Facilities Management
- And Education to name a few.