What is tendering in business and how can it help my company grow?
You may be asking yourself, what is tendering in business? It’s a common question if you’re new to the world of procurement. This blog will explain what tendering is, how it can benefit your business and the different types of tendering procedures. There are a lot of similarities across multiple industries in the way they do business in the public sector.
So, what is tendering in business?
Essentially, tendering in business is a formal process where a business is invited to bid for contracts. These tenders can be released by either public or private organisations. Potential suppliers will then complete a tender response and buyers will evaluate the responses and select a preferred supplier.
A tender response should be persuasive and convince the buyer that you’re the best company for the job. Buyers will often have a minimum eligibility criterion that hopeful suppliers will need to meet in order to progress. This varies depending on the tendering procedures selected by the buyer.
Before you begin
Before you begin tendering in business, you should set your business expectations. Being realistic about what contracts you’re going for can help optimise your chances of success. Before you begin, ask yourself:
· Does my business meet or exceed the technical skills required?
· Do I have the necessary experiences?
· Does the contract fit into my business strategy?
· Can my business afford to spend the time and resources on the application?
· Do I have the time and resources to actually supply the contract?
· Will this contract help my business grow?
The tendering process
There are a number of tendering processes depending on the buyer’s needs. They can choose how to procure a good or service. There are two main processes that are used. They are as follows:
1. Open tendering procedure
The open tendering procedure is frequently used within the public sector. It’s used to procure fairly ‘simple’ goods or services. For an open tendering procedure, buyers are allowing any business to bid for their contract. The process looks like this:
An ITT is released
A buyer would release an invitation to tender (ITT). Any prospective supplier can respond with how they intend to fulfil the contract. In their response, they are persuading the buyer that they’re the best business for the job.
Once the responses have been evaluated, the contract will be awarded. If you are tendering in the public sector, the award will go to the most economically advantageous tender (MEAT).
2. Restricted procedure
A restricted tendering procedure is used for more complex commodities. As they are usually of a higher contract worth, a buyer implements a vetted procedure. This is to ensure that prospective suppliers are qualified to carry out the work.
They set eligibility criteria that suppliers have to meet in order to qualify. This stage can be referred to as a pre-qualification questionnaire (PQQ) stage. It also can be known as a selection questionnaire (SQ) or PAS91 (specifically used in the construction industry).
The PQQ/SQ stage involves a business being asked for their company:
· Turnover
· Insurance policies
· Non-collusion
· Qualifications and accreditations
After this has been passed, the supplier will then be shortlisted and progress to an ITT. Once again, they will respond in line with the specification. They’ll detail how they intend to deliver the contract and why they’re the best business for the job.
Once they’ve been evaluated, the contract is awarded.
Sector-specific requirements for tendering in business:
Depending on the sector your business is in there may be different requirements or expectations when tendering for contracts. Framework Agreements and Dynamic Purchasing Systems (DPS) are more common in some sectors than others, for example.
Framework agreements
A framework agreement is a type of multi-supplier agreement that’s frequently used within the public sector. Frameworks can run for years at a time. They are a good way to secure a pipeline of work for your business, if successful. Some may even have the possibility of an extension. They are most frequently found within the following sectors:
- Construction
- Healthcare
- Facilities
- Technology.
They are split into lots with each lot representing a specific good, work, service or geographical location. This allows suppliers to apply to the specific lots they specialise in or the region they operate in. Depending on the tender agreement, a supplier may be eligible to apply for more than one lot. If this is the case, you’ll need to be prepared to provide evidence. You’ll have to demonstrate that your business has the capacity and resources to undertake the works across the selected lots.
Dynamic Purchasing Systems
A Dynamic Purchasing System is similar to a framework agreement in the sense that they are multi-supplier agreements. Again, DPS’ can run for multiple years at a time and are used by public sector organisations. We have seen DPS’ that have been open for 10 or more years. There are two main differences between a DPS and a framework:
1. Suppliers can a DPS join at any time while it’s open
2. It is a completely electronic process.
The following sectors often have tendering opportunities in the form of DPS’:
- Healthcare
- Facilities
- Logistics
- Technology
- Creative.
The process often starts with a pre-qualification questionnaire (PQQ) or selection questionnaire (SQ). This is done to narrow down those who will be sent an invitation to tender (ITT). The PQQ and SQ stage is mainly comprised of capability and competency-based questions. Buyers will likely ask for your company’s policies and statements of non-collusion and other box-ticking exercises. This includes stating any grounds for mandatory exclusion and so on. This is the initial stage of tendering for a DPS.
Once a business has passed the first stage, it will progress onto the ITT stage. This is when your business will answer more technically focused questions on how you will carry out the contract.
Successful suppliers will receive a place on the DPS and then a range of tenders will be released. This streamlines the process for both buyers and suppliers as they don’t need to resubmit a PQQ or SQ.
Spot provider frameworks
Spot provider frameworks are used within the healthcare industry and are a great way to help your business grow. Securing a place on the framework can guarantee income, secure a pipeline of work and enable you to gain experience. These are just a few advantages of tendering.
A spot provider framework is a great way for your business to gain experience if it’s relatively new. This is important as the more experience you have as a company, the bigger the tenders you can go for. This can help your business grow. Almost every tender will require you to demonstrate your capabilities via case studies. A buyer will usually require up to three case studies within the last five years.
Such case studies should demonstrate previous contracts your business has fulfilled. They should be similar in scope, scale and complexity and location where possible. They should be relevant to the contract at hand. Depending on word count, adding a testimonial from previous happy clients will strengthen your response.
Pseudo Dynamic Purchasing Systems
Pseudo Dynamic Purchasing Systems (PSPS) or pseudo-DPS, can be found within the healthcare sector. It is a type of online procurement tool used by NHS England. It includes a list of pre-approved GP providers that can be invited by local commissioners to deliver local GP services.
Where can I find tendering opportunities for my business?
Now you know what tendering is in business, you might wonder where you can find tendering opportunities. There’s no shortage of websites offering multi-sector tendering opportunities and leads. Ideally, you should be searching for a sector-specific portal that posts unique, public and private sector opportunities.
Simply relying on CPV codes can result in missed opportunities as they are often mislabelled. Finding a portal that uploads and categorises tenders by keywords, location and budget and more can streamline the process. Our sister company, Hudson Discover, hosts 11 sector-specific tendering portals. One centralised and easy-to-navigate portal can help you save time, streamlining the process.
These sectors consist of;
- Healthcare Tenders
- Creative Tenders
- Facilities Tenders
- Construction Tenders
- Technology Tenders
- Logistics Tenders
- Research Tenders
- Consultancy Tenders
- HR Tenders
- Finance Tenders
- Hospitality Tenders
Once signed up, you’ll have access to your own dedicated Account Manager. They’ll be able to answer any more questions you may have about what tendering is in business. You’ll also get an email alert when new and relevant tenders are uploaded to your sector.
The benefits of tendering for work
Now you know what tendering is in business, you may be wondering what the benefits are. There are a number of advantages for your business. These can include:
· Securing a pipeline of work. If you secure a place on a DPS or framework as mentioned above, you can secure a pipeline of work. This will ensure that you have business opportunities.
· Guaranteed pay (in the public sector). The Crown Commercial Service must pay contractors within 60-days of invoicing to comply with the Prompt Payment Code. This gives suppliers peace of mind, especially for first-time winners.
· Increased experience. The more contracts you win, the more experience you have. The more experience you have, the bigger contracts you can go for. The bigger contracts you go for, the bigger you can grow your business.
Need help when tendering for work?
No matter the sector you’re in, buyers care about the quality of your tender response. If writing isn’t your forte, then outsourcing to bid writing experts can help get you on the path to success. Not everyone has the time, resources or experience to write a winning response. Here at Hudson Succeed, we pride ourselves on being bid writing experts.
We hold an 87% success rate and have over 60 years of collective bid writing experience. They know how to win a tender. We offer four levels of bid writing support to suit every business need. Whether you’re completely new to tendering, or need a response proofread before you submit – we can help.