Tendering for contracts can be time-consuming and challenging but the rewards can be worth it. And the good news for small firms is that the Government is commited to giving more contracts to SMEs than ever before
Tendering can be a major opportunity to win new business, particularly if you sell to public-sector organisations or compete for large contracts. Understanding the tender process and how to tender will help you submit winning proposals.
Identifying tender opportunities
Building relationships with customers can be the best way of finding out about forthcoming tenders. As part of this, you may need to go through a pre-qualification process, demonstrating to a potential customer that you meet their general supplier requirements.
This sort of approach gives you a head start when the customer decides to ask suppliers to tender for a contract. Purchasers often alert preferred suppliers about their requirements by sending a request for proposal (RFP) or invitation to tender (ITT).
You can also identify upcoming tenders by monitoring appropriate publications and websites. For example, there is a legal requirement for government tenders and other public tenders above set values to be published as part of the procurement process. Search for government contracts using Contracts Finder. Significant new tender opportunities may well be reported in the trade press. Even small suppliers can benefit from tracking these: while a small company may not be able to compete directly for a large contract, there may be opportunities to collaborate or subcontract on parts of a larger contract.
Cost-effective tendering focuses on pursuing the most promising tender opportunities - where you have a good chance of winning profitable contracts. Tactfully declining an invitation to tender may sometimes be the best option.
One way to improve the odds is to get involved as early in the process as possible. You may be able to give a potential customer advice on what they should be looking for, gently steering the customer towards issuing a tender document that plays to your strengths.
Try to understand why a contract is being put out to tender. The customer may just be going through the motions, trying to put pressure on their existing supplier's price, or looking for free ideas without any intention of giving you the contract.
If the tender really is an open opportunity, you want to know how much competition there is and how the customer plans to compare different contract bids. Would they value a better but more expensive solution, or are they just looking for the lowest price?
How to tender
Your proposal should be driven by the tender document, ensuring that you meet all of the requirements. You may need to contact the customer to clarify any queries.
You should try to highlight areas where you have a competitive advantage that matches the customer's needs. Key issues typically include:
- meeting any requirements in terms of your financial strength, insurances and so on;
- demonstrating that you have the required experience and expertise;
- showing that you have any required policies (for example health and safety) and systems (such as quality management);
- providing a specification for what you will do and when;
- explaining how you would manage the contract;
At the same time, consider whether you need to take steps to protect yourself. For example, you might want a non-disclosure agreement to protect details of your ideas or pricing. You may also want to negotiate a contract that protects you against unacceptable risks (for example if you cannot accurately predict your costs) or build a safety margin into your pricing.
Your submission should be clear and well-presented. If the tender document specifies what format your submission should take and what the deadline is, you must comply. Whatever the outcome, you should follow up to ask why your bid succeeded or failed so that you can improve future tenders.
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