The How, Why and Where of Tendering
How To: Tender
What is a Tender?
A tender is an Invitation For Bid for a project/service that is presented by small and big companies alike. It is a document that will be sent to potential clients. Tendering is popularly referred to as the process whereby the government and financial institutions invite bids for large projects that must be submitted by a deadline. However, there are personal tendering services where smaller companies can make their services known.
Bids for a tender can span over many different industries, including:
• Accounting, Banking, and Legal
• Building and Trades
• Civil
• Cleaning and Facility Management
• Consulting
• Electrical and Automation
• Property and Auctions
• HR and Training
• IT and Telecoms
• Materials, Supply, and Services
• Mechanical, Plant, and Equipment
• Media and Marketing
• Medical and Healthcare
• Security, Access, Alarms, and Fire
• Travel, Tourism, and Hospitality
There are tenders in any required industry.
What is an Invitation For Bid
An Invitation For Bid is used in situations where potential vendors that are competing with one another are differing on prices. Therefore, issuing one allows a company to provide a detailed description including all the terms and conditions that are required for the company to do a job.
These bids may be offered orally, in writing, or via online platforms, such as National Tender Council.
Understanding an Invitation For Bid.
A detailed and comprehensive Invitation For Bid will describe the whole project or service in detail, providing all the necessary information one would need to make an informed decision on whether this tender is suitable for you and your company.
When is Appropriate to Solicit an Invitation For Bid?
An Invitation For Bid is used when you are trying to prevent corruption and avoid favoritism. They are oftentimes used within government institutions, but they are not limited to government institutions and expands to large and small businesses.
It is vital for the Invitation For Bid to be detailed – with as much detail as you think is important for the interested party to know – however, the deciding factor will be the price of the bid and how it compares to those who are presenting a bid too.
What do you need to prepare?
The preparation of tenders is very time-consuming; it costs money and ties up valuable resources. However, we have compiled a list of the preparation material.
Here are a few key points to consider when you are about to bid:
• Get a hold of the bid documents and analyse them.
• Make sure you can match all the requirements
• What is the cost to prepare your bid?
• Assess how the contract would affect your business and your business strategy.
Request for Proposal
It is important to note, an Invitation For Bid is not the same as a Request for Proposal – which is where a company requests funding for a project. The main outlines of a Request for Proposal are the bidding process and contract terms and guides and format of a bid.
Requests for Proposal also allow companies to get multiple bidders.
How does a Tender Work?
When it comes to projects or procurements, the majority of institutions have a well-defined tendering process, as well as processes to govern the opening, evaluation, and final selection of the vendors – this is to ensure that one removes the possibility of corruption and favoritism working their way into your selection process.
The selection process is generally very fair and transparent – as the tender is very detailed, there is no question as to why the choice was made to go with a vendor, as it comes down to the price.
A request to tender is a formal and structured invitation to suppliers to submit competitive bids to supply raw materials, products, or services. This is a public and open process, as laws were created to govern the process to ensure fair competition amongst bidders.
Tenders services are available for potential bidders and include a wide range of tenders from private and public sources.
What is Procurement?
It may sound more daunting to you than it is. The basis of procurement is the fact that it is the act of obtaining and getting goods for the sake and use of businesses. The reason it is most associated with companies and businesses is the fact that this is the target market that needs to purchase your goods and services on a higher scale.
Procurement is generally a term used during the final act of purchasing, however, may also be used when referring to the purchasing process.
How does procurement work?
Procurement and its processes can require a large number of a company’s resources to manage. The budget for procurement provides managers with a specific value they can spend to procure the goods or services they require.
Preferential Procurement Policy Framework Act
The idea of a system of preference in the context of procurement is that one bid will be preferred over others because it meets or exceeds specific criteria or conditions. This may mean that the criteria supersede a selection criterion.
In the private sector =, “value for money” is sometimes used to explain why a more expensive proposal is preferred over a cheaper proposal. The argument is that the organization will ultimately realize more value if it awards the deal to the supplier with the more expensive proposal.
A fundamental assumption, built into all Preferential Procurement Regulations, is that the state is prepared to pay a premium to achieve transformation. Under the 80/20 preference system the maximum premium is 25% and under the 90/10 preference point system, the maximum 25% more to acquire goods and services. In the 90/10 system, the premium could be a little over 1* if the award is between a supplier with a level one B-BBEE certificate/affidavit and one with a level two B-BBEE certificate/affidavit.
Updated procurement and SCM policies and processes per the 2017 regulations:
• Market-related pricing
• Prequalification criteria
• Standard Bid Documents
• Evaluation spreadsheets must be updated and controlled
• Feasibility of subcontracting
• Objective criteria
Expectations exist amongst stakeholders in national and local government and particularly amongst board members of public entities, that the Preferential Procurement Regulations 2017 will help them increase the institutions’ expenditure.
Special Tender Considerations
A tender offer is a public solicitation to all shareholders requesting that they tender their stock for sale at a specific price during a certain time. To entice shareholders to release a specific number of shares, the offer typically exceeds the current market value of shares.
How the Tender Process Works:
It is vital for all potential or aspiring bidders that they are familiar with the tender process in South Africa. As mentioned above, there are many procedures that should be followed by Government Entities when they issue a request for quotations or competitive bids – the procedures in and of themselves are governed by different Acts – Preferential Procurement Policy Framework Act (Act no 5 of 2000), and the Public Finance Act (Act 1 of 1999 as amended by Act 296 of 1999).
Most of the Government Entities that issue tenders follow these procedures to the letter, however, there are some Government Entities that do not follow all the procedures. The reasons for this can be many, but the main reason is that not all the procedures listen in the Acts are applicable to the specific request for a quotation or competitive bids that have been issued.
It is especially important that you as a potential bidder ensure that:
• You attend/read the brief/requirements
• Read and compose the tender document in accordance with the competitive bids.
• You have completed all the documents in the original bid document
• You have attached all the compulsory documents.
If you understand the tender process, and you think that you have a valuable tender, we will be more than happy to take you through the process and help you with the creation and registration.
Your Tender:
What to put in your tender?
Ensure that you match the bid specification and answer all the questions.
Summarise your bid and explain why it answers the client’s needs. Write this last but put it at the beginning of your tender.
Crucial rules for your tender document.
• Focus on the client – determine the needs of your target audience.
• Value for money – ensure what you are offering is a value for their money. Try and go the extra mile.
• Analyse – look at all the cost and pricing factors of the contract. Do not ignore small things such as the wage.
• Contract management – show proof and competency that you have the resources to do work in a cost-effective manner to meet the client’s needs, deadlines, and being flexible.
How to write your tender:
Once you have decided to bid, you will need to decide how you will manage the bid, start with making a list of questions you would ask if a company was submitting a tender to provide a product or service to you.
Clients will expect you to:
• State the purpose and origin of the bid.
• Summarise your work as a contractor, past experiences, and credentials for this job.
• Say how you will carry out the work, and how and when the client’s aims will be achieved.
• Explain the benefits and value for money of your bid.
• Detail when and how goods and services are to be delivered and provide a timetable.
• Demonstrate your team’s skills, experiences of similar work, and their responsibilities.
• Explain how you will manage the project
• Give details of your pricing and any aftercare arrangements within the price.
• Be practical and identify potential problems without being what is impossible for you to deliver.
How does procurement work?
It is worth it to spend some time and perfect your tender and the process thereof. Here are some tips on editing and supplying your tender:
• Keep sentences and paragraphs short, punchy, and business-like.
• Use bullet points and headings to break up the text.
• Decide on typeface, layout, and type size – not too small – and stick to them.
• Make sure everything is standardized.
• Make sure the formatting is all similar.
• Make sure you are logical.
• Re-read your material again.
• Produce a cover letter.
• Ensure information is easily found and in succession to relatable categories.
Where to find tenders?
As is mentioned above, tenders are available to the public. National Tender Council specializes in tenders that are industry-specific.
National Tender Council brings more than 1000 tenders right to your computer – with a massive user and tender database, we aim to bring the most relevant tenders to you and to provide you with an easy way to apply for tenders. Our website also provides opportunities for businesses ranging from small to large to easily identify and apply for tender opportunities. It also allows for companies and government departments to put out tenders and easily screen for the most suitable tenderer. All relevant information of companies and tenders can now be viewed in one easy to use site.
Our website uses technology to bring Companies as well as Government departments together faster and more efficiently than ever before.
It is worth noting that our website displays public and private sector tenders updated daily. We provide the following functionality in a user-friendly medium:
• Publication of public sector tenders.
• Publication of private sector tenders.
• Publication of companies along with their relevant information along with the tenders that these companies put out.
• Search capability to identify tenders per:
• Keyword Search
• Industry: Defines the category of the company.
• Location: The general location of the tender.
• B-BBEE Level: B-BBEE level requirements for tenders.
• Search capability to identify companies per:
• Keyword Search functionality.
• Industry: Defines the category of work wherein this company works.
• Location: The general location of where the company is situated.
• B-BBEE Level: The level that the company is rated at.
• Black Shareholder Percentage: The black ownership percentage of the specific company.
• Black Female Shareholder Percentage: The percentage of company-owned by black females.
Summary:
• Tendering is popularly referred to as the process whereby the government and financial institutions invite bids for large projects that must be submitted by a deadline
• An Invitation For Bid is used in situations where potential vendors that are competing with one another are differing on prices
• Issuing one allows a company to provide a detailed description including all the terms and conditions that are required for the company to do a job
• Our website provides opportunities for businesses ranging from small to large to identify and apply for tender opportunities.