Understanding the tender process in procurement is vital for ensuring fairness, transparency and value for money in every purchasing decision. Whether you work in the public or private sector, following a clear, structured process helps you identify the right suppliers, manage risk and demonstrate compliance with procurement best practice.
In this guide, we’ll explore when to use a tender, the main types of tender processes and the essential steps to follow to achieve effective and accountable procurement outcomes.
Tendering vs Request for Quotation (RFQ): Knowing the Difference
| Tender | Request For Quotation |
|---|---|
| Formal process | Informal process |
| High value | Low value |
| High complexity | Low complexity |
| Strategic procurement | Transactional procurement |
| Time consuming | Fast process |
| Highly governed | Limited red tape |
When to Use a Tender Process
When deciding when to engage in a tender process, if there is a choice, noting that in Public Sector the guidelines are pre-written, a full knowledge of the key steps should be present.
If working in the Public Sector the choice of tender processes to undertake include open, competitive flexible and direct award. These choices are subject to strict processes and conditions and have to be followed exactly.
Types of Tender Processes in the Public Sector
An open tender allows any qualified supplier to submit a bid meaning that there is a higher likelihood of the best value opportunity being supplied but it does mean that there is a lot of work to evaluate and feedback to every supplier.
The competitive flexible approach allows Public Sector procurement teams to develop their own multi-stage tender process. This can include negotiation, dialogue and site visits if desired. This approach is new in accordance with the more recent Procurement Act 2023 and has been designed to give the Publics Sector more flexibility to meet their bespoke needs.
A direct award approach is where the tender process does not happen due to a pre-agreed reason such as there only being one supplier in the marketplace (monopoly) or time constraints demand that the contact is awarded quickly.
Tendering in the Private Sector
In the private sector the rules are less stringent but choices still need to be made in relation to whether the tender is going to be an open or a restricted process.
A restricted process is where suppliers are pre-evaluated to assess their suitability for the procurement. This involves sending a pre-procurement questionnaire to ascertain which suppliers appear to be the best fit to fulfil the need. This also means that all responses to the ITT will be from suppliers that can deliver
Whilst Private Sector tendering is not regulated like the Public Sector approach, it is still good practice to follow key to promote fairness and transparency.
The Key Steps of a Tender Process
| Type of Tender Process | Description |
|---|---|
| Identification of need | Establish the requirement from a stakeholder ensuring the specification is fully understood and the need justified. |
| Establish award criteria | Against which criteria are the bids going to be evaluated i.e. price, quality, sustainability |
| Decision of tender type | Is the tender going to be open or restricted? |
| Tender document preparation | Develop and create the draft contract, the terms and conditions and final specification. |
| Issue of PPQs (if relevant) | Send out the questionnaires to potential suppliers. Carter’s 10 Cs is a good way to screen suppliers. |
| Short list suppliers to participate | Evaluate the results of the PPQ and decide which suppliers are to move forward in the process. |
| Send ITT | Send the documents created to the pre-approved suppliers. Ensure there is a deadline for submission given on the documentation. All suppliers must return their bids by the deadline to be included in the process. |
| Receive bids | Bids are received and logged as they arrive. |
| Open bids | Bids are opened. This should be done by a procurement team, not individually to promote fairness and transparency in the process. |
| Evaluate bids | The bids are evaluated against pre-determined criteria and scored according. A weighted scorecard is good tool to use here. |
| Seek confirmation of any outstanding points | Request any outstanding information from suppliers needed i.e. copies of accreditations |
| Award contract | Award the contract to the most suitable supplier offering the best value. |
| Feedback | Once the supplier has accepted the contract generate feedback for the non successful suppliers. |
| Manage contract | Manage the contract against SLAs and KPIs to evaluate supplier performance. |
Final Thoughts
By following the key steps in a tender process, an audit trail is kept to ensure that any challenges to the decision made can be answered and justified demonstrating procurement promoting a fair and open way of working.
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