Does the Tendering Process Provide an Unfair Advantage to Buyers?

Business & Finance

To a layman, the difference between a tender and a simple contract might be insignificant. However, the two modes of conducting business have vastly varying implications for collaborating entities. The tendering process is often viewed as a cumbersome activity that takes ages to run its course. It is perhaps the phenomenon that newly appointed procurement managers fear the most. Given the intricate nature of the way procurement works for large-scale projects, the fear is understandable. However, despite the daunting nature of tender management, it has its well-respected place in the business world. Here’s why government departments, as well as private enterprises, choose to tender:-

The tendering process is ethical:- This is especially true in the case of government organizations. Given the concrete legal peripheries that government entities function within, they are required to conduct procurement practices in a transparent and publicly visible manner. The business laws in most countries dictate government departments to reveal their home publications tenders on official websites, and other public media like newspapers, and trade magazines. In the case of private enterprises, the comparatively flexible nature of the tendering process doesn’t take away from the fact that pre-defined selection criteria govern its functioning. Internationally favored tendering protocols have been built upon strong ethical foundations, and most business entities adhere to these norms.

The tendering process puts the publication end of the process in power:- When a business entity invites parties to tender, it automatically assumes the position of the entity dictating the norms. A formally documented initialization to the procurement process comes equipped with certain requirements and eligibility criteria that bidding parties are bound to respect. Once you initiate the tendering process, you hold the power to dictate the agenda of the future collaboration you’re looking for.

The tendering process breeds competence:- When multiple businesses contest with each other for the opportunity to fulfill a supply-related requirement, or to work on a government-issued project, they bring their A-game to the table. The competitive environment central to tendering makes room for the best proposal to attain the contract promised at the end of the process. Even the participating entities that don’t win the contract extract value from this ecosystem. They get privy to assessment reports that help them perform better in future tender applications. Furthermore, the entity that released the tender for publication in the first place doesn’t do so without conducting a heavy amount of due-diligence. All in all, every party engaged in the process of tendering acts competently.

The tendering process saves time in the long-run:- Believe it or not, even the taxing ordeal of tendering comes with time-saving benefits for all involved parties. At the buyer’s end, the tendering process makes sure that an intricately-weaved request to tender communicates the exact nature of their procurement. Thus, the proposals that buyers receive are relevant to their needs. For the supplier, tendering makes it easy to look for projects or opportunities that are within their domain of expertise as well as capabilities. Suppliers can also deter from bidding if the financial compensation mentioned in the initial documentation prefacing the later stages of the tendering process is below expectations. Procurements that make use of tendering save time by creating a transparent and meticulous mechanism that functions on a strict supply-and-demand basis.

After some basic research, it becomes apparent that tendering is an efficient solution to a somewhat complex problem in the business world. However, it is somewhat true that tender-based procurement practices place the buyer at an advantage. In such a landscape, how can suppliers get the most of contesting in bidding wars that originate from tendering? Here are some insights insight that can be valuable to vendors or service providers:-

  • Government organizations will almost always advertise their home publications tenders on their official websites. Thus, stay updated on the tender-issue notifications of government departments that intersect with the domain of your business.
  • Alternatively, make use of online tender services that keep a track of available as well as upcoming tenders based on industries and other filters. Whenever a company posts a tender for publication on such portals, you can gain an edge over your competitors by entering the game early.
  • Do not waste your company’s time and resources by bidding on tenders that you aren’t qualified for. The procurement protocols that dictate the tendering process paint out a clear picture of what buyers are looking for. Unless you don’t fall within the umbrella of suitable candidates, employ your efforts elsewhere.
  • Make sure that you write proposals in service of the company you’re aiming to work with. While answering questions prescribed in the template for proposal submission, detail how you can solve the expected roadblocks to the project advertised in the tender’s invitation.
  • Take deadlines seriously! The tendering process is a formal mechanism that exerts a great toll on the publishing end of the process. Proposals take time and assets to be made sense of and evaluated properly. Bids that are received beyond prescribed deadlines are often rejected then and there.
  • Try researching your competitors to ascertain how you can beat them. At the end of the day, the tendering process is a competitive construct. If you don’t provide a solution better than all the other alternatives, you wouldn’t end being the winning tenderer.

It is indisputable that the scales are somewhat tipped to the buyer’s side when it comes to tendering. However, the imbalance of power is only marginal. Sellers also have a lot of pull in the tendering process. A successful contractual relationship emerging out a tender-based opportunity with a government organization can do wonders for a supplier’s resume. Furthermore, given the fact that tenders are mostly created for capital-intensive collaborations, suppliers stand to make a good level of profit once they come out as victors in the bidding process.

The tendering ecosphere benefits both the buyer as well as the supplier in multiple ways. Simply put, it is an almost level-playing field made of beneficiaries; not winners and losers.

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