Open tendering is often the preferred
competitive procedure for purchasing goods, services or works, the fundamental
requirements of which are that tenders should:
- Be open to all qualified and interested suppliers.
- Have objective qualification criteria.
- Specify neutral and precise technical
specifications.
- Be advertised by a means that is open to all.
- Engender a clear and accurate evaluation criterion.
- Only be awarded to the most cost-advantageous bid.
The Tender must be fair, open, and
transparent. The method used to select the winning supplier must be objective
and allow for selecting the most commercially advantageous solution based on an
easy-to-understand price/quality criterion.
The price/quality criteria can be based
on a ratio that utilises price or quality as the determining factor. The market
is driven by price, and this element will be a significant part of the buying
decision process.
In contrast, where quality is more
important, a prequalified list of the essential attributes of the purchase
should be drawn up to formalise a baseline upon which the buying decision will
be based, within which price will be the minor determining factor.
A genuinely open tender
process fosters the most effective competition and adds the greatest value
for money. However, there are arguments to the contrary that the open tendering
process is overly complex as it is strictly procedurally based and is designed
primarily for the procurement of simple purchases that are straightforward to
describe.
As a result, the open tender process is
unsuitable for complex procurements where the focus is more on the output and
outcome of the purchase, rather than the strict adherence to standards. The
disadvantages of open tendering are:
- An extended timeframe for the completion of the
process.
- It requires strict adherence to administrative
procedures.
- The capacity for the creation of clear and precise
specifications.
- Suppliers are restricted in determining the technical
requirements.
- It limits the building of long-term Supplier
relationships.
- It tends to focus only on the least-cost solution.
- Formalisation could
limit supplier participation.
Open tendering is a procedure that
allows an organisation to submit a requirement for goods, works, or services to
an open market. It offers an equal opportunity, without any buyer or
organisational bias, to any supplier to submit a bid to supply the goods,
works, or services.
The benefit of using open tendering to
negotiate prices is that it introduces the highest degree of price competition
within the open market, which is the most significant technological advancement
innovator.
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