Understanding tender terms
Bidding: This is an invitation to supply an item/items or undertake a project say, road construction or building a classroom block. Note that all public sector purchases or contracts in many countries over a certain value have to be publicly advertised in newspapers, trade journals, notice-boards and on the Internet.
After tenders are invited, contractors submit their bids, which are then evaluated after the bids submission deadline. Later, one or more contractors are selected, while those that were not successful are notified and debriefed. Project works or delivery of goods is effected after the signing of contracts between the project owner and the successful firms.
Tenders can be classified based on the requirement category or procurement type. There are various types of tenders, however, the main categories are:
Open bidding: This is an arrangement, where an advertisement in local newspapers invites contractors to bid for a project. Open tender is a transparent process, which ensures that only the contractor with the best price and meeting all the technical requirements will win the tender.
Limited bidding: Here, only pre-qualified or known bidders are allowed to participate. Limited tenders are not advertised in newspapers, meaning that other bidders are locked out of the process. The lowest bidder generally wins the contract.
Single tender means sending the tender to one particular party. Normally, it is either for an item, where there is only one supplier or for an item where the purchaser has developed confidence in one supplier only and would just like to verify the current price, delivery and other few details.
Negotiated tender: In this method, normally one contractor is approached. This type of procurement in mainly used for specialist works such as working on elevators or selected airport projects. Usually, there are a limited number of contractors who do such work. It is based on one-to-one discussion with contractors to negotiate the terms of contract.
International competitive bidding: This is a method for procuring goods and services, where international firms are allowed to participate. Bidders from eligible countries, as defined by the contracting agency or country, are given an equal opportunity to bid. This is contrary to national competitive bidding, where only local companies can participate.
To be continued next week
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