Open tendering is the most widely used
form of competitive process within the public sector, less so within the
private sector. It is used for procuring products, works, or services. An
organisation’s requirements are detailed in a document advertised in the open
market for all suppliers to consider.
An open tender follows established
procedures within the organisation’s procurement guidelines. The process can be
undertaken in several diverse ways, each with its increasing level of
complexity. Such methods include:
- Request for Information: This is the simplest form of open
tender. An organisation searches for what is available from a specific
market sector, with the simplest requirements and a broad element of
sample pricing requested.
- Request for Pricing: This is a more formal form of
open tendering, generally undertaken for simple procurement requirements.
It often requests bespoke pricing.
- Invitation to Quote: This is an informal method of
open tendering in which the requirements are slightly more complex. They
require a more detailed and in-depth specification and often request just
pricing, although quality questions may be asked.
- Open Tender: This is the most complex form of
open tendering, where quality is considered. Quality questions will be
asked along with a robust schedule of rates and charges in the final
supplier selection decision, which will utilise a scoring method based on
a price/quality ratio.
The fundamental requirements of open
tendering are that tenders should:
- Be open to all suitable suppliers and bidders.
- Be advertised within a reasonable geographical region.
- Have objective supplier selection criteria.
- Have neutral, transparent, and unambiguous
requirements specifications.
- Have an objective and straightforward evaluation
process.
- Be awarded to the most economically
advantageous supplier without further contract negotiations.
There are many advantages to open
tendering being used, some of which may include:
- People Involvement: The people responsible for the
products, services, or works are directly involved with selecting the
supplier within an evaluation panel.
- Due Diligence: Due diligence criteria can be
standardised, reducing the commercial, operational, and legislative risks
of supplier selection.
- Service: An evaluation panel can consider
service levels, and specific service KPIs can be incorporated into the
tender documentation. Suppliers will be aware of the standards the
organisation wishes to achieve and can price the level of service
accordingly.
- Quality: Stipulating the quality of
products, works, or services required is essential to evaluating the
balance between price and quality accordingly.
- Competitive Value: The open market offers the most
significant level of price competition. As suppliers compete for the
tender award, they are unaware who is bidding at what price.
- Market Awareness: Open tendering allows
organisations to review the market's offerings and ascertain an
understanding of the alternatives available.
- Control: Organisations can periodically
review their requirements to suit the prevailing market conditions in
terms of service, pricing and quality based on specific requirements. The
open market is the most significant source of innovation.
- Best Fit: Tendering is the best way for
organisations to test their pricing against the market and source the best
suppliers for various spend categories.
- Service Level Agreements: An organisation can establish its
key performance indicators, quality standards, and service levels from the
outset to better position itself to negotiate terms with suppliers and
reduce pricing, operational, or legislative risks.
For many public and private sector
organisations, open tendering is the preferred method of procuring products,
works, or services exceeding £100,000.00 per annum at the most competitive
level. Different requirements for quality and price may govern each tender
project.
The open tender remains the most popular
among the diverse tenders (restricted, negotiated, competitive dialogue, open).
However, participants have cited several disadvantages of this kind of
procedure, such as it:
- Takes time to complete the
procurement project.
- Restricts the supplier from
determining the technical specifications.
- Limits supplier participation due
to its excessive formalism.
- Requires strict adherence to compliance procedures.
- Limits the building of long-term relationships with
suppliers.
- The decision-making part of the
open tender process is often the most challenging stage.
Decisions will invariably be influenced
by politics, uncertainty, lack of knowledge, and people's unwillingness to be
accountable. However, writing down the requirements is often an excellent start
to the decision-making process. Once the requirements specification has been
decided upon and agreed upon, the open tender provides a smooth path to
selecting a supplier who can fulfil the requirements because of its formality.
Although open tendering has
disadvantages, many organisations utilise the process as it brings people
together to consider the exact requirements for the products, works, or
services. Within the open tender procedure, the decision-making process is
formalised. It is made by the tender evaluation panel, whose auditable decision
removes bias, personal feelings, and sentiments and ensures openness, probity,
and transparency.
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