Finance:Call for bids
A call for bids,[1] call for tenders,[2] invitation to tender [3] (ITT, often called tender for short), invitation for bid (IFB) or invitation to bid (ITB) [4] or notice inviting tenders (NIT, a term often used in purchasing in India ) [5] is a procedure for generating competing offers from different bidders looking to obtain an award of business activity in works, supply, or service contracts, often from companies who have been previously assessed for suitability by means of a supplier questionnaire or pre-qualification questionnaire (PQQ).
A call for bids differs from a request for proposal (RFP), in which case other reasons (technology used, quality) might cause or allow choice of the second best offer. An RFP is a request for a price from a buyer but the buyer would also expect suggestions and ideas on how the project work should be done. RFPs are thus focused on more than just pricing/cost, they entail a bit of consulting from the contractor or vendor.
Types
Open tenders, open calls for tenders, or advertised tenders are open to all vendors or contractors who can guarantee performance.
Restricted tenders, restricted calls for tenders, or invited tenders are only open to selected prequalified vendors or contractors. This may form part of a two-stage process, the first stage of which (as in the expression-of-interest (EOI) tender call)[6][7] produces a shortlist of suitable vendors.
The reasons for restricted tenders differ in scope and purpose. Restricted tenders can come about because:
- essentially only one suitable supplier of the services or product exists
- of confidentiality issues (such as in military contracts)
- of the need for expedience (as in emergency situations)
- of a need to weed out tenderers who do not have the financial or technical capabilities to fulfill the requirements
Origin of the term
Dictionaries explain the etymology as coming from Old French tendre, which means 'to offer'.
The following false etymology is sometimes heard: When merchant ships arrived at a port of call, they would post a notice describing the goods they wished to buy or sell. This notice was delivered ahead of the ship by a tender—a small boat—and hence the process became known as tendering.[citation needed]
Double envelope system
In an open bid or tender system, a double envelope system may be used. The double envelope system separates the technical proposal (based on and intended to meet the statement of work) from the financing or cost proposal in the form of two separate and sealed envelopes.
During the tender evaluation, the technical proposal would be opened and evaluated first followed by the financing proposal.
The objective of this system is to ensure a fair evaluation of the proposal. The technical proposal would be evaluated purely on its technical merits and its ability to meet the requirements set forth in the Invitation without being unduly skewed by the financial proposal.
Tender box
A tender box is a mailbox that is used to receive the physical tender or bid documents. When a tender or bid is being called, a tender or bid number is usually issued as a reference number for the tender box. The tender box would be open for interested parties to submit their proposals for the duration of the bid or tender.
Once the duration is over, the tender box is closed and sealed and can only be opened by either the tender or bid evaluation committee or a member of the procurement department with two witnesses.
Security deposit
Registered contractors are usually required to furnish a bond for a stipulated sum as security or earnest money deposit to be adjusted against work done, normally in the form of bank guarantee or surety.
Locating tender opportunities
Public sector organisations in many countries are legally obliged to release tenders for works and services. In the majority of cases, these are listed on their websites and traditional print media. Electronic procurement and tendering systems or e-procurement are also increasingly prevalent.
A number of companies provide subscription alert services which send notifications of relevant tender documents to the subscriber.
An array of private organisations also assist businesses in finding out about these tenders. Cost may vary from a few pounds a week to a few hundred.
Because of the specialised language and sometimes difficult-to-grasp procedures, there are several consulting organizations[who?] also offer companies tender writing training, or do the writing for them.[citation needed]
Typical template contents (in project management)
A typical invitation to tender template in any project has the following sections:[8]
- Introduction
- Project background
- Legal issues
- Maintaining issues
- Supplier response required
- Timetable for choosing a supplier
- Requirements
Post-tender negotiation
Post-tender negotiation involves negotiation between an intending buyer and seller after a seller's tender has been submitted. An initial stage may involve tender clarification, which is intended to eliminate any uncertainties or contradictory elements of a proposal, before moving into a true "negotiation" phase.
The Chartered Institute of Procurement & Supply believes that "provided it is undertaken professionally and ethically, ... post tender negotiation is an appropriate process to secure value for money.[9]
See also
- Construction bidding
- E-procurement
- ERFx
- Government procurement
- Government procurement in the European Union
- Presales
- Private electronic market
- Procurement
- Project management
- Proposal (business)
- Request for proposal
- Request for tender
- Reverse auction
- Statement of work
- Strategic sourcing
References
- ↑ Consular reports: Commerce, manufactures, etc, Issues 164-167. United States. Bureau of Foreign Commerce, United States. Dept. of Commerce and Labor G.P.O., 1894. Pg 361
- ↑ The Electrical Journal, Volume 58. 1907 Pg 826
- ↑ Invitation to tender, information for bidders, contract, specifications, bond and contractors' proposal, Issue 1. Delaware Bridge Joint Commission of the States of Pennsylvania and New Jersey Enterprise Pub. Co., 1921
- ↑ Phillips, Joseph. "Procurement Management in Project Management - Taking Out a Contract". http://www.pmhut.com/procurement-management-in-project-management-taking-out-a-contract. Retrieved 2010-03-24.
- ↑ Telecommunications Consultants India Limited, Notice Inviting Tenders (NIT), accessed 6 March 2019
- ↑ Urizar, Mark (2013). The Project Manager's Checklist for Building Projects: Delivery Strategies & Processes. Xlibris Corporation. p. 236. ISBN 9781483662954. https://books.google.com/books?id=EWmLAAAAQBAJ. Retrieved 2015-12-03. "The Expression of Interest (EOI) tender call is to inform tenderers of the context of the project, nature of proposed appointment and submission requirements. The aim of the EOI process is to shortlist the contenders who may be suitable for the appointment."
- ↑ Compare: Herbst, Douglas; Edmondson, Samuel A. (2012). "Design-Build Procurement Approaches". in Shorney-Darby, Holly. Design-build for Water and Wastewater Projects. American Water Works Association. p. 73. ISBN 9781583218181. https://books.google.com/books?id=kiUG3w0KGmkC. Retrieved 2015-12-03. "An Expression of Interest (EOI) is a document that an owner can issue prior to the release of the RFQ or RFP. [...] An EOI [...] would request basic information about the design-builder, solicit comments on the requested project features, and ask for an EOI for the project from the practitioners."
- ↑ Lasa Information Systems Team. "Invitation to tender". PM Hut. http://www.pmhut.com/project-management-invitation-to-tender. Retrieved 2010-04-02.
- ↑ CIPS, Tendering and Post Tender Negotiation, accessed 4 June 2018
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