Identify and describe the different types of tender and discuss the major steps that have to be followed in the tender procedure
What is a tender?
Tenders are open invitation to buy or sell goods/services/contracts. Tender usually refers to the process whereby governments and or financial institutions invite bids for large projects that must be submitted within a finite deadline. Those who are interested in supplying what has been advertised can respond to a Tender & submit their best competitive offer. The best competitive offer (Lowest Bidder or L1) is generally selected & the contract is awarded to L1 Bidder. The term also refers to the process whereby shareholders submit their shares or securities to a takeover offer.
Type of tenders
Open Tender - In Open Tender anyone can participate. The tender is formally announced. The tender period is to last at least 14 days, according to the GPA. The procurement entity can determine which bidding conditions meet their needs for local or foreign supply of products and/or services. Thus there are no restrictions to whom can bid for the tender as long as it’s a registered company it can be local or foreign. The participant has to ensure that they fulfil the minimum pre-qualification criteria specified in the tender document to qualify. If they do not meet the pre-qualification criteria, their bid will be rejected & they will lose the document fees they have paid. It is necessary that open Tender is advertised in newspaper, so that it gets the widest publicity. The Lowest Bidder or L1 generally wins the contract.
Give high level of competition and companies tend to give best prices It is very transparent process which ensures that only the contractor with the best price and meeting all the technical requirements are chosen.
Selective Tender-A select tender is only open to a select number of suppliers. It could be for complicated or difficult procurements, the client can opt to use the selective bid