There are several different types of tender that you might come across as you’re scrolling through Contracts Finder or Find a Tender, looking for new opportunities for your business. It’s helpful to understand the difference between these tender types, so you know what to expect when you start the process. There are four main types of tender in public and private procurement. They are:
This is the type of tender you are most likely to see in the public sector, as it is, as the name implies, open to anyone who wishes to submit a response. Every organisation that wants to, can submit a tender.
This may start with a Pre-Qualification Questionnaire, or PQQ where the buyer verifies you have the capability to deliver before the full Invitation to Tender (ITT), or the PQQ may be part of the ITT itself alongside quality questions, method statements, and social value requirements.
Open tendering has its critics, as it allows anyone to submit which can be a waste of time and money for both buyer and seller. That’s why it’s important to make good Bid/No-bid decisions when responding to open tenders.
As the name implies, selective tendering happens when an organisation invites certain companies to tender, usually where they have a prior relationship or they have successfully completed a PQQ in an earlier stage.
The advantage to the seller here is that you have a much narrower field of competition, allowing you to play to your strengths and emphasise where you are different and better.
Primarily used in more complex projects such as construction or engineering, a negotiated tender is used where the outcomes or costs of the project are unclear. A single supplier will work with the project team, allowing for better communication and understanding of project requirements. These tenders generally only happen for very specialist projects where there may only be one viable company who can provide the service, or where the scope of an existing tender needs to be expanded.
These types of tenders can be single-stage, or two-stage. In single-stage tenders are used when the buyer has all the information that is needed for the tenderer to give a full response to both the way they will deliver and the costs. If this can’t be done, then a two-stage tender process is entered into where the initial stage focuses on the supplier and quality, and in the second stage, they negotiate the price.
Serial Tendering or Continuity Tendering
These are both ways that organisations that have an ongoing program of work can find suppliers. For these types of tenders, the process starts with a smaller tender for a single piece of work. Additional pieces of work are then offered on successful completion.
While this does lower costs for both buyer and seller, it doesn’t give the financial security of a long-term contract and so doesn’t allow the opportunities for innovation and financial security that a longer-term contract would.
Frameworks and Dynamic Purchasing Systems (DPS)
You may also come across opportunities for your company to join a framework or DPS. These types of tenders are like completing the first stage of a formal tender process; you become pre-qualified to do work for any organisations that use the framework or DPS.
Once you have a place on a framework or DPS, you may win work by direct award, or you may have to go through an ITT or mini-competition process to allow the organisation to choose between you and other pre-approved competitors.
Before committing your time and money to these types of tender, check the documentation to see if they give any idea of the volume of work you can expect to be offered. If they don’t give it, then ask as a clarification question. You need to know what the chances are of winning a reasonable amount of work to make the application financially viable.
Still Confused by Types of Tenders?
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