Bidding for public contracts can be a challenging and often confusing process, complete with unfamiliar terminology, complicated PQQs/selection questionnaires and lengthy specification documents. Many bidders, particularly SMEs with little to no experience in public sector tendering, hold a variety of misconceptions regarding the processes and outcomes of bidding for a contract.
Irrespective of industries or contract value, here are a few examples of our most frequently encountered misconceptions about the tender process.
Is there such a thing as a ‘typical tender?’
One of the most common questions we receive when handling client queries is the size, scope and value of a typical tender. As tender length and complexity is determined by a variety of elements, there is no ‘one-size-fits-all’ response to this question. Variations could be determined by the following:
- Industry, product or service required from the supplier
- Breadth of requirements and scope of services from the purchasing authority
- Duration of the contract or framework agreement
- Number of documents in the total package of tender information.
These elements will subsequently inform the amount, length and complexity of tender responses, as well as the rigour of the PQQ stage.
Furthermore, all tenders are regulated by the Public Contracts Regulations (2015). Currently, the regulations provide guidance for different procedures and the number of permitted bidders. The three main procedures are:
- Open procedure: permits any bidder to submit a tender without pre-qualification – the simplest process
- Restricted procedure: only allows candidates to bid upon invitation, as arranged by the buyer (usually based on previous performance/experience)
- Negotiated tender: a buyer will approach a single supplier and open negotiations of deliverables, timescales and pricing – often employed for highly technical tenders.
Although open procedure tenders constitute the majority of public sector opportunities, it is important to be mindful of the differences during the researching and bidding process.
SMEs stand little chance of winning public tenders
Small- and medium-sized businesses often feel as if they lack the labour resources, supply chain strength and tendering know-how to succeed when bidding for public sector contracts. However, a collection of central and local government initiatives have been implemented to generate a larger proportion of procurement for SMEs in the coming years.
The upcoming Procurement Bill is looking to further reduce barriers to SME tendering; paired with a target from many central government authorities to spend 33% of public money with SMEs, opportunities are not strictly reserved for larger businesses.
Copying and pasting previous responses is sufficient to win a tender
While it is advisable to maintain and work from a bid library if you have tendering experience, copying and pasting previous responses will often result in poor marks from evaluators. High-quality responses will align closely with the specification, asset list and geographic scope of each individual tender, drawing on specific examples to craft a persuasive response.
It is therefore beneficial to closely research each buyer and tender specification, tailoring responses as much as possible to these elements and avoiding a simplistic ‘copy and paste’ approach.
Regardless of the quality of the bid, buyers will retain the incumbent supplier
Another common misconception includes the insurmountable advantage that incumbents have when a contract is re-tendered. Although incumbent suppliers will have knowledge of purchasing authorities’ working processes and requirements, there are many reasons why a buyer may be looking to change suppliers, including:
- Failure to achieve project timescales
- Substandard quality of works or services
- Discrepancies in invoicing/supply chain payment
- Uncompetitive pricing models
- The competitive nature of the tendering process has left the incumbent behind, based on updated evaluation criteria.
Furthermore, any existing communications incumbents have with authority representatives must be suspended outside of formal channels during the bidding process, eliminating any unfair advantages.
Ultimately, the tender will be awarded to the lowest bidder
While competitive pricing remains an important element of a successful tender, the quality/price split will ensure that contracts are not simply awarded to the lowest bidder in every case. The split will vary in accordance with buyer preferences and elements necessary for successful delivery, permitting the construction of a strong bid without falling into the trap of unsustainable pricing.
Furthermore, purchasing authorities are wary of suspiciously low pricing, and will often request supplementary information as part of due diligence. For example, a 2021 Construction Policy Note from the Scottish government outlined guidance for public sector representatives in handling abnormally low tenders.
Nevertheless, pricing remains an important element of the bidding process, and should be carefully considered, discussed and reviewed by all key stakeholders prior to the final submission – including whether or not it is feasible to turn a profit.
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