Tender Procurement Process
WHAT IS A TENDER?
A tender is a submission made by a prospective supplier in response to an invitation
to tender. It makes an offer for the supply of goods or services. In construction, the
main tender process is generally for the selection of the contractor that will
construct the works.
The Stages of the Tender Procurement Process
The chart below shows the various steps that form a typical tendering process for a
large contract – smaller value contracts may well be simpler. Organisations within
the public sector often run slightly different processes too.
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Form Procurement Team
The procurement team will typically involve procurement; the budget holder and others involved
in managing the contract.
TIP: The higher the value of the contract, the bigger the procurement team – often involving
senior management. Also the tendering process becomes more drawn out. The same applies to
high-profile purchases.
For example a very high-value contract, or one that involves contracting out for the first time,
will often involve a large team (including directors) and have a full tender process (as shown in
the chart). Conversely, smaller contracts may have a much simpler tender procurement process.
This is seen in the public sector where high-value contracts must be advertised as NLNG contracts
involving various trains, whereas smaller jobs might be let via a mini-tender.
Develop Tender & Evaluation Criteria
The procurement team then agree what the tender will involve eg:
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Specification or general requirement
Supplier requirements and mandatory requirements (eg ISO standards)
Questions
Tender rules or instructions
Evaluation criteria (how it will be scored eg 60% quality / 40% price)
Contract (eg one-off, term or framework)
The tender procurement process (eg PQQ or not)
Pre Qualification Questionnaire (PQQ)
This is an initial selection process to help sift potential suppliers for suitability. It is used to
create a long-list of companies to be invited to tender. This stage of the tender process might be
by invitation or open to everyone.
The qualification stage might take the form of an approved supplier list, an initial screening
interview or a formal PQQ (questionnaire to assess against minimum requirements). Some
tenders incorporate aspects of the PQQ within the tender therefore eliminating this stage.
Issue Tender
The invitation to tender (ITT) will be issued to the long-list of selected potential suppliers. This
might involve a set of questions to be answered along with a pricing matrix. Alternatively it
could be less formal – simply asking the bidder to submit a formal proposal and a price.
Public sector and corporates tend to use formal ITTs – especially for higher-value tenders. NB etenders are becoming increasingly popular.
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Tender Briefing Meeting
It is not uncommon for the tender procurement panel to hold supplier briefing meetings (pretender meetings). Their intention is to help clarify the tender and answer any questions.
Initial Evaluation
The tender panel mark each bid against their agreed evaluation matrix. This results in a league
table of the highest and lowest bidders’ scores.
Presentations, Interviews & Visits
Short-listed bidders are sometimes subject to further evaluation by means of a tender short-list
presentation or a question and answer session. This might be extended to a visit to supplier’s
premises and possibly meeting some of their customers.
Again, the tender panel will assess this against their pre-determined evaluation criteria.
Selection
Whatever the tender procurement process, the tender panel will arrive at its final scores and will
use those to select the best performers and award contract(s).
Negotiations
The limit of tender negotiations depend on the nature of each individual tender procurement
process – a formal tender may not offer any scope for negotiation whilst others will allow small
negotiations. This can include some aspects of price (eg additional items), contract wording and
specification (eg items that don’t affect the overall service). It is unlikely that there will be
opportunity for any major negotiation – especially not on the overall price.
TIP: Be sure that you know what is negotiable before finalising your tender submission by
asking Tender Clarification Questions otherwise you could find yourself in a sticky situation!
Contract Award
Once everything in the tender procurement process is finalised, contract(s) are awarded.
Unsuccessful bidders should have a chance to get feedback on tenders. This helps companies to
help gain a better understanding on how to improve in future.
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Tender processes for construction contracts
Introduction
A tender is a submission made by a prospective supplier in response to an invitation to tender. It
makes an offer for the supply of goods or services.
In construction, the main tender process is generally for the selection of the contractor that will
construct the works. However, as procurement routes have become more complex, so tenders may
be sought for a wide range of goods and services (for example on a construction management
contract the works are constructed by a number of different trade contractors each contracted to
the client) and contractors may take on additional functions such as design and management. There
is also an increasing tendency for suppliers to be aggregated into single contracts, for example,
'integrated supply teams' on public projects may include; the main contractor, designers, subcontractors, suppliers, facilities mangers and so on.
Irrespective of the nature of the goods or services that are being sought, the process for securing
tenders may take a number of different basic forms:
Open tendering
Open tendering allows anyone to submit a tender to supply the goods or services that are required.
Generally an advert will be placed giving notice that the contract is being tendered, and offering
an equal opportunity to any organisation to submit a tender.
On larger projects, there may then be a pre-qualification process that produces a short-list of
suitable suppliers who will be invited to prepare tenders. This sort of pre-qualification process is
not the same as selective tendering (see below).
Open tendering has been criticised for attracting tenders / expressions of interest from large
numbers of suppliers, some of whom may be entirely unsuitable for the contract and as a result it
can waste a great deal of time, effort and money. However, open tendering offers the greatest
competition and has the advantage of allowing new or emerging suppliers to try to secure work.
Selective tendering
Selective tendering only allows suppliers to submit tenders by invitation. A pre-selected list of
possible suppliers is prepared that are known by their track record to be suitable for a contract of
the size, nature and complexity required. Consultants or experienced clients may maintain
‘approved’ lists of prospective suppliers and then regularly review performance to assess whether
suppliers should remain on the list.
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Selective tendering can give clients greater confidence that their requirements will be satisfied and
should reduce the wasted effort that can be involved in open tendering. It may be particularly
appropriate for specialist or complex contracts, or contracts where there are only a few suitable
firms.
Negotiated tendering
Negotiating with a single supplier may be appropriate for highly specialist contracts, or for
extending the scope of an existing contract. It can reduce the costs of tendering and allow early
contractor involvement, but the competitive element is reduced, and unless the structure of the
negotiation is clearly set out there is the potential for an adversarial atmosphere to develop, even
before the contract has been awarded.
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The Contracting Process
This procedure outlines the process for signing agreements that are binding on an organization.
Contracts include any written agreement, contract, subcontract, binding letters of intent,
memoranda of understanding, memorandum of agreement, lease, deed, transfer, instrument,
assignment, obligation, certificate or other document.
Step 1: Selecting a Contract
What is a Contract?
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An agreement between two or more parties that creates obligations that are enforceable or
otherwise recognized by law
Examples of contracts include but are not limited to any document that has terms of and
conditions, leases, letters of agreement, memoranda of understanding, letters of intent and
interagency or intrasystem agreements
Contracting agencies can be private industry, government agencies and non-profit
organizations.
Which Contract Should I Use?
Often, the sponsor chooses the agreement type negating your opportunity to choose an agreement
type. However, where possible, it is important to select the agreement type best suited for your
transaction.
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Step 2: Collecting the Necessary Information
It is important not to engage in any work without a formal, written agreement signed by a person
authorized.
What documents are needed to complete the contracting package?
The complete contracting package will include:
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Fully-signed Proposal Routing Sheet in UAccess Research. Please note: Proposal Routing Sheets
are not required for contracts reviewed by Procurement and Contracting Services
Budget
Payment Schedule
Statement/Scope of work
Word version of the contract with all relevant exhibits and attachments
Additional supporting documents
Step 3: Choosing a Negotiator
Who negotiates an agreement?
The Procurement & Contracting Services department is responsible for developing and
reviewing agreements between the Company and external parties. All parties work to ensure
accountability, appropriate internal consultations, compliance with relevant regulations,
legislation and policies of the organization.
No person who is not an authorized signatory may enter into binding contract negotiations,
or approve or execute a contact on behalf of the organization without authorization. Only
those individuals specifically authorized by any organization may legally sign agreements
for the Board, acting for and on behalf of Tender or Contract Board.
Procurement contracts are defined in general terms as formal agreements with a business entity
to secure specific goods and/or services that are subject to compliance with procurement policies
(e.g. technology, hotels and resorts, marketing, maintenance services, temporary personnel,
leases, and auxiliary contracts such as bookstore services, vending machines, or food service
agreements)
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Procurement for services
Contractor agreements
Equipment maintenance agreements
Leases of movable property, such as tools, equipment, vehicles, etc.
Leases, deeds, and other conveyances affecting interests in real property
Debt instruments and related documents
Maintenance agreements
Software license agreements, and
Promissory notes and other instruments for the payment of money
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Step 4: The Contract Review Process
Who should I contact to get an agreement reviewed?
Failure to follow the below stated guidance will delay the review and execution of your
agreement.
The standard routing path for agreements TO PAY an individual, corporation, or other entity
(excluding sub-agreements) is as follows:
Forward a copy of the agreement and referenced attachments and exhibits to Procurement &
Contracting Services.
Agreement processing time is three to four weeks. Expedited processing is available with a
processing time of one to two weeks. All processing times are dependent on the complexity of
the agreement
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Send only original agreements -- faxed, scanned, or copied signatures will not be accepted
Include all terms & conditions, either on the back of the document or as an attachment
Include all referenced exhibits, attachments or addendums
It is important to note that contracting reviews agreements only for legal content and may not
be aware of any special terms and conditions. As principal investigator, you are responsible for
correct inclusion of special terms or conditions
Thus, the principal investigator must read the agreement to ensure the following are correct:
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all blanks are filled in correctly
freight charges, if any, are reflected correctly
dollar amounts match
taxes, if any, are included
payment terms are acceptable
equipment installation terms, if any, are accurate
pick up and return of equipment, if applicable, is acceptable
warranty is acceptable
maintenance, if needed, is included
term of the agreement is correct
any renewal options, if necessary, are included; is automatic renewal desired?
Step 5: Contract Signing
Only those individuals specifically authorized by the various departments may legally sign
agreements for the Board, acting for and on behalf of organization.
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