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An invitation to tender (ITT, otherwise known as a call for bids or a request for tenders) is a formal, structured procedure for generating competing offers from different potential suppliers or contractors looking to obtain an award of business activity in works, supply, or service
contract A contract is a legally enforceable agreement between two or more parties that creates, defines, and governs mutual rights and obligations between them. A contract typically involves the transfer of goods, services, money, or a promise to tr ...
s, often from companies who have been previously assessed for suitability by means of a supplier questionnaire (SQ) or pre-qualification questionnaire (PQQ). The term "notice inviting tenders" (NIT) is often used in purchasing in India. An ITT differs from a
request for quotation A request for quotation (RfQ) is a business process in which a company or public entity requests a quote from a supplier for the purchase of specific products or services. RfQ generally means the same thing as Call for bids (CfB) and Invitatio ...
(RFQ) or a request for proposal (RFP), in which case other reasons (
technology Technology is the application of knowledge to reach practical goals in a specifiable and reproducible way. The word ''technology'' may also mean the product of such an endeavor. The use of technology is widely prevalent in medicine, scien ...
used, quality) might cause or allow choice of the second best offer. An RFP is a request for a price from a
buyer Procurement is the method of discovering and agreeing to terms and purchasing goods, services, or other works from an external source, often with the use of a tendering or competitive bidding process. When a government agency buys goods or serv ...
but the buyer would also expect suggestions and ideas on how the project work should be done. RFPs are thus focused on more than just pricing/
cost In production, research, retail, and accounting, a cost is the value of money that has been used up to produce something or deliver a service, and hence is not available for use anymore. In business, the cost may be one of acquisition, in whic ...
, they entail a bit of consulting from the contractor or
vendor In a supply chain, a vendor, supplier, provider or a seller, is an enterprise that contributes goods or services. Generally, a supply chain vendor manufactures inventory/stock items and sells them to the next link in the chain. Today, these terms ...
. The closest equivalent to an ITT in the mainstream
private sector The private sector is the part of the economy, sometimes referred to as the citizen sector, which is owned by private groups, usually as a means of establishment for profit or non profit, rather than being owned by the government. Employment The ...
is an RFP which, since public money is not involved, typically has a less rigid structure.


Typology

*Open tenders, open calls for tenders, or advertised tenders are open to all vendors or contractors who can guarantee performance. *Restricted tenders, restricted calls for tenders, or invited tenders are only open to selected pre-qualified vendors or contractors. The tender stage may form part of a two-stage process, the first stage of which (as in the expression-of-interest (EOI) tender call) was itself advertised, resulting in a
shortlist A short list or shortlist is a list of candidates for a job, prize, award, political position, etc., that has been reduced from a longer list of candidates (sometimes via intermediate lists known as "long lists"). The length of short lists varie ...
of selected suitable vendors. * Sole source tenders, where only one potential supplier is invited to submit a tender. The reasons for using restricted tenders differ in scope and purpose. Restricted tenders can come about because of: *
confidentiality Confidentiality involves a set of rules or a promise usually executed through confidentiality agreements that limits the access or places restrictions on certain types of information. Legal confidentiality By law, lawyers are often required ...
issues (such as in military contracts) *the need for expeditiousness (as in emergency situations) *a need to exclude tenderers who do not have the financial or technical capabilities to fulfill the requirements. A sole source tender may be used where there is essentially only one suitable supplier of the services or product.


Etymology

Dictionaries explain the etymology as coming from
Old French Old French (, , ; Modern French: ) was the language spoken in most of the northern half of France from approximately the 8th to the 14th centuries. Rather than a unified language, Old French was a linkage of Romance dialects, mutually intel ...
, which means 'to offer'.


Typical template contents

A typical invitation to tender template in any project has the following sections: *Introduction * Project background *
Legal issues List of lists of issues and controversies with the law * Legal issues in airsoft * Legal issues with fan fiction * Burger King legal issues * Legal issues and controversies surrounding Netflix * Legality of cannabis * Legal issues surrounding ...
: proposed terms and conditions of contract * Supplier response required * Timetable for choosing a supplier * Requirements for tender submission, for example a fully completed but otherwise unamended form of tender must be submitted by the specified deadline.


Locating tender opportunities

Public sector organisations in many countries are legally obliged to release tenders for works and services. In the majority of cases, these are listed on their websites and traditional print media. Electronic procurement and tendering systems or
e-procurement E-procurement (electronic procurement, sometimes also known as supplier exchange) is the business-to-business or business-to-consumer or business-to-government purchase and sale of supplies, work, and services through the Internet as well as ...
are also increasingly prevalent. The
European Union The European Union (EU) is a supranational union, supranational political union, political and economic union of Member state of the European Union, member states that are located primarily in Europe, Europe. The union has a total area of ...
states that 235,000 calls for tender are issued annually using its
Tenders Electronic Daily Government procurement or public procurement is undertaken by the public authorities of the European Union (EU) and its member states in order to award contracts for public works and for the purchase of goods and services in accordance with princ ...
(TED) system, including those issued by countries in the
European Economic Area The European Economic Area (EEA) was established via the ''Agreement on the European Economic Area'', an international agreement which enables the extension of the European Union's single market to member states of the European Free Trade As ...
and beyond. Public sector organisations in the United Kingdom use this system but from 11pm on 31 December 2020, at the end of the
Brexit Brexit (; a portmanteau of "British exit") was the Withdrawal from the European Union, withdrawal of the United Kingdom (UK) from the European Union (EU) at 23:00 Greenwich Mean Time, GMT on 31 January 2020 (00:00 1 February 2020 Central Eur ...
transition period, a new e-notification service called "Find a Tender" (FTS) began to be used to post and view public sector procurement notices. Relevant new procurement opportunities launched after 11pm on 31 December 2020 must be published on this website. A number of companies provide subscription alert services which send notifications of relevant tender documents to the subscriber. An array of private organisations also assist businesses in finding out about these tenders. Cost may vary from a few pounds a week to a few hundred. Because of the specialised language and sometimes difficult-to-grasp procedures, there are several consulting organizations, who offer companies tender writing training, or undertake bid-writing for them. ITTs may be distributed to potential bidders through a tender service, allowing businesses to receive and search live tenders from a range of public and private sources. These alerts are most commonly sent daily and can be filtered down by geographical area, or by business sector. Some tendering services divide types of business very finely in their own way, by CPV (
Common Procurement Vocabulary The Common Procurement Vocabulary (CPV) has been developed by the European Union to facilitate the processing of invitation to tender published in the Official Journal of the European Union (OJEU) by means of a single classification system to descri ...
) codes. This enables a business to find ITTs specific to what that business can supply. An ITT is usually an open invitation for suppliers to respond to a ''defined'' need as opposed to a request being sent to selected potential suppliers. The ITT often requests information following on from other information gathered previously from responses to a Request for information (RFI). This will usually not only cover product and service requirements, but will also ask for information about the suitability of the business. A supplier questionnaire or pre-qualification questionnaire may be used to elicit suitability information from suppliers in a consistent manner. An ITT is usually expected to conform to some legally standardized structure designed to ensure
impartiality Impartiality (also called evenhandedness or fair-mindedness) is a principle of justice holding that decisions should be based on objective criteria, rather than on the basis of bias, prejudice, or preferring the benefit to one person over another ...
, and the tender bid winner is entitled to take responsibility of the contract business supply documentations formalities and settle any tender bid engagement charges for official recording.


Pre-qualification questionnaires

Supplier questionnaires or pre-qualification questionnaires (PQQs) ensure that potential suppliers are all asked the same information when assessing their suitability to be invited to tender or to have their tenders evaluated. Some organisations issue a standard pre-qualification questionnaire, for example the UK government has developed standard core PQQ questions which have been revised several times and are "mandated for use" across government, and has also stipulated that PQQs should not be used by central government contracting bodies when procuring goods or services valued less that the threshold values set by European and UK procurement legislation.


Tender box

A tender box is a mailbox used to receive the physical tender or bid documents, or a digital equivalent. When a tender or bid is being called, a tender or bid number is usually issued as a reference number for the tender box. The tender box would be open for interested parties to submit their proposals for the duration of the bid or tender. After the closing date, the tender box is closed and sealed and can only be opened by either the tender or bid evaluation committee or a member of the procurement department with two witnesses. Even though the tender box is not implemented in every country around the world, the procedure remains the same. Tenders have a bidding period available to prepare and bid. Research has shown that the length of this period might affect the number of bids and as a result competition among renderers


Double envelope system

In an open bid or tender system, a double envelope system may be used. The double envelope system separates the technical proposal (based on and intended to meet the statement of work) from the financing or cost proposal in the form of two separate and sealed envelopes. During the tender evaluation, the technical proposal would be opened and evaluated first followed by the financing proposal. The objective of this system is to ensure a fair evaluation of the proposal. The technical proposal would be evaluated purely on its technical merits and its ability to meet the requirements set forth in the Invitation without being unduly skewed by the financial proposal.


Security deposit

Registered contractors may be required to furnish a
bond Bond or bonds may refer to: Common meanings * Bond (finance), a type of debt security * Bail bond, a commercial third-party guarantor of surety bonds in the United States * Chemical bond, the attraction of atoms, ions or molecules to form chemical ...
for a stipulated sum as security or earnest money deposit to be adjusted against work done, normally in the form of bank guarantee or
surety In finance, a surety , surety bond or guaranty involves a promise by one party to assume responsibility for the debt obligation of a borrower if that borrower defaults. Usually, a surety bond or surety is a promise by a surety or guarantor to pay ...
.


Tender validity date

A tender validity date is a date until which a tenderer commits to keeping their prices (and other tender details) open for acceptance (or otherwise) by the client. Such a date is usually included in a form of tender, either as a specified date or as the termination of a specified period from another key tender date. For example, i
tendering for gym equipment
in 2013,
West Dunbartonshire Council West or Occident is one of the four cardinal directions or points of the compass. It is the opposite direction from east and is the direction in which the Sun sets on the Earth. Etymology The word "west" is a Germanic word passed into some R ...
required tenderers to accept that "Your tender shall remain open for acceptance for ninety (90) days from the date for return of tenders indicated above, or any subsequent date notified to you by us. Your tender may be accepted by us at any time during this period."


Post-tender negotiation

Post-tender negotiation involves negotiation between an intending buyer and seller after a seller's tender has been submitted. An initial stage may involve tender clarification, which is intended to eliminate any uncertainties or contradictory elements of a proposal, before moving into a true " negotiation" phase. The
Chartered Institute of Procurement & Supply The Chartered Institute of Procurement & Supply (CIPS), formerly the Chartered Institute of Purchasing & Supply, is a global professional body working for the procurement and supply profession in many regions of the world. It promotes best pra ...
believes that "provided it is undertaken professionally and ethically, ... post tender negotiation is an appropriate process to secure
value for money In economics, economic value is a measure of the benefit provided by a good or service to an economic agent. It is generally measured through units of currency, and the interpretation is therefore "what is the maximum amount of money a speci ...
.CIPS
Tendering and Post Tender Negotiation
accessed 4 June 2018


Related proposal types

Other types of proposal and terms in use include: *EOI – expression of interest *IFB – invitation for bids *ITN – Invitation to negotiate *ITV –
invitation to vendors An invitation to tender (ITT, otherwise known as a call for bids or a request for tenders) is a formal, structured procedure for generating competing offers from different potential suppliers or contractors looking to obtain an award of business ...
*RFA –
request for applications Request may refer to: * a question, a request for information * a petition, a formal document demanding something that is submitted to an authority. Request may also refer to: Computing and technology * in computer science, a message sent be ...
*RFD –
request for documentation Request may refer to: * a question, a request for information * a petition, a formal document demanding something that is submitted to an authority. Request may also refer to: Computing and technology * in computer science, a message sent be ...
*RFI – request for information *RFO – request for offers *RFP – request for proposal *RFQ –
request for quotation A request for quotation (RfQ) is a business process in which a company or public entity requests a quote from a supplier for the purchase of specific products or services. RfQ generally means the same thing as Call for bids (CfB) and Invitatio ...
or
request for qualifications A request for qualifications (RFQ) is a step sometimes used in the formal process of procuring a product or service, for example by a government agency. It is typically used as a screening step to establish a pool of vendors (businesses or individ ...
*RFS –
request for services Request may refer to: * a question, a request for information * a petition, a formal document demanding something that is submitted to an authority. Request may also refer to: Computing and technology * in computer science, a message sent be ...
*
Sources sought A sources sought (often capitalized as Sources Sought) notice is used by agencies of the government of the United States to solicit interest in a project under consideration by that agency. They are not requests for proposals or invitations to bid ...


See also

*
Construction bidding Construction bidding is the process of submitting a proposal ( tender) to undertake, or manage the undertaking of a construction project. The process starts with a cost estimate from blueprints and material take offs. The tender is treated as an ...
*
E-procurement E-procurement (electronic procurement, sometimes also known as supplier exchange) is the business-to-business or business-to-consumer or business-to-government purchase and sale of supplies, work, and services through the Internet as well as ...
* ERFx *
Government procurement Government procurement or public procurement is the procurement of goods, services and works on behalf of a public authority, such as a government agency. Amounting to 12 percent of global GDP in 2018, government procurement accounts for a sub ...
** Government procurement in the European Union *
Presales Presales is a process or a set of activities/sales normally carried out before a customer is acquired, though sometimes presales also extends into the period the product or service is delivered to the customer. Responsibilities In a typical sa ...
* Private electronic market *
Procurement Procurement is the method of discovering and agreeing to terms and purchasing goods, services, or other works from an external source, often with the use of a tendering or competitive bidding process. When a government agency buys goods or s ...
*
Project management Project management is the process of leading the work of a team to achieve all project goals within the given constraints. This information is usually described in project documentation, created at the beginning of the development process. T ...
*
Proposal (business) A business proposal is a written offer from a seller to a prospective sponsor. Business proposals are often a key step in the complex sales process—i.e., whenever a buyer considers more than price in a purchase.Newman, Larry. Shipley Associates ...
* Request for proposal *
Reverse auction A reverse auction (also known as buyer-determined auction or procurement auction) is a type of auction in which the traditional roles of buyer and seller are reversed. Thus, there is one buyer and many potential sellers. In an ordinary auction al ...
* Statement of work * Strategic sourcing


References

{{Procurement requests Procurement Governmental auctions