Tendering involves prospective suppliers bidding against one another to win contracts. This process can be highly competitive, especially when tendering for public sector contracts that tend to focus on quality services and value-adding techniques, not just ‘lowest price wins’.
The construction industry is renowned for competitive tendering and has possibly been given a bad name in low-price tendering methods. However, framework agreements (which are common in construction and other industries) are a perfect example of a competitive process benefiting the winning bidders. Suppliers have access to ongoing work, sometimes by multiple government bodies, without having to tender each time, although this is quite competitive.
Understanding the principles behind competitive tendering for local government contracts can help guide your bid submission and doesn’t need to be a challenging task. Following the below steps will ensure you submit a competitive bid and stay part of the competitive tender process.
Value for money
The main benefit perceived in the competitive tendering process for government contracts is value for money. It is thought that a more competitive process will drive down prices and drive up added value, as firms all strive to showcase themselves as the most attractive choice for the contract. Typically, this is done via a competitive price and then further benefits which the contracting authority will gain. This should not be based on a low price alone, which may cut corners. Examples of added value that can be included in a competitive tender might be:
- Additional small-scale works delivered for free. Savings are then directly transferred to the end client
- Innovations or advanced technology which streamlines processes, as a key factor.
All of these should be directly outlined in your tender submission, with monetary values included, if possible, to provide a tangible benefit to the assessor against competing suppliers.
These benefits are not to be confused with social value, which is another topic entirely but also one which buyers are likely to include in your tender return document.
Competitive tendering can also provide transparency in the marketplace, which is one of the government’s main aims in public sector procurement. To abide by the laws, a government contract must be advertised to all, available to SMEs (most of the time) and information must be transparent and free throughout the process. The evaluation of the contract is done as set out in the tender documents and, once awarded, the contract award is published to all.
Disadvantages of competitive tendering
There are, of course, disadvantages associated with competitive tendering. The premise of goods or services being procured in a competitive manner can harm the buyer–supplier relationship. The supplier begrudges offering their bid at the lowest price with additional benefits to the buyer, and the buyer is faced with a difficult and timely evaluation process.
It may also discourage bidders and actually limit the number of offerings if potential bidders deem the process too competitive. Bidders and prospective suppliers may then worry they cannot deliver or submit a competitive bid.
Using your competitive edge
It is important throughout the bid process to determine your unique selling points. This will help drive your competitive edge throughout the quality element of your bid submission. Unique selling points may seem a natural thing for your company to do but, in reality, they might provide added value, additional benefits and a differentiator from your competitors.
For more information on writing a tender we have various free resources, or view our experience on our website to find out more about our bid and tender services.
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