1

THE BASICS OF

TENDERING & BIDDINGGeneral Guide To Tendering & Bidding Processes

By: Moatasem Mabrouk2015

2

CONTENT

Introduction

Terms & Definitions

Tender Process Map

Bidding Process Map

Proposal Evaluation

3

INTRODUCTION Procurement is the acquisition of goods, services or works from an external source. It is favorable that the goods, services or works are appropriate and that they are procured at the best possible cost to meet the needs of the acquirer in terms of quality and quantity, time, and location. Corporations and public bodies often define processes intended to promote fair and open competition for their business while minimizing exposure to fraud and collusion.

Procurement vs. acquisition: procurement is the act of buying goods and services for an organization. And, acquisition is the conceptualization, initiation, design, development, test, contracting, production, deployment, Logistics Support (LS), modification, supplies, or services (including construction) to satisfy organization needs.

Acquisition is therefore a much wider concept than procurement, covering the whole life cycle of acquired systems. Multiple acquisition models exist, one of which is provided in the following section.

Following slide shall describe some procurement methods

4

INTRODUCTION

Open Tendering: Open tendering is shorthand for competitive bidding. It allows companies to bid on goods in an open competition or open solicitation manner.

Restricted Tendering: Unlike open tendering, restricted tendering only places a limit on the amount of request for tenders that can be sent by a supplier or service provider.

Request for Proposals (RFP): Request for Proposal is a term that is used all across the business world. Client receives RFP’s from potential clients all the time when a client is seeking a new suppliers.

Two Stage Tendering: a two stage process which is suitable for large scale projects in which the supplier gets involved in the design phase, method statement and pricing. This phase enable the client to evaluate more and select best bidder out of the 1st stage who will award the contract of this phase.

Request for Quotations: This procurement method is used for small-valued goods or services. Request for quotation is by far the least complex procurement method available.

Single-Source: is a non-competitive method that should only be used under specific circumstances. Single source procurement occurs when the procuring entity intends to acquire goods or services from a sole provider

5

INTRODUCTION Some Benefits of Tendering & Bidding Process:- Enhance Competition between suppliers, Cost optimization and value of sale

enhancement, Transparency of acquisition process, Open vacancies for new market competitors

and entrepreneurs, Minimize potentials for conflict of interest, Give more space for negotiation, Assure subjectivity and accuracy of

acquisition.

Applications:-

Organizations tends to call for tender due to different reasons that might be vary from entity to another, below are sample of reasons for using bidding & tendering process:- Legal & Legislation requirements, New product/service acquisition, Large scale acquisition [exceed the limits

defined in the organization’s policies], Special requirement acquisition, Cost optimization and value of sale

enhancement

6

TERMS & DEFINITIONS

Tender – The term “tender” is often used interchangeably to the term bid.  However, “Bid” is increasingly being used by the bidder (the supply side) and the term “tender” used on the procurement side (the buyer).

Bid – an approach to a client in order to gain significant new or repeat business..

Proposal – The proposal is a written offer from a seller to a prospective buyer. It is a critical step in the complex sales process

Business profile, or corporate credentials – A business profile or corporate credentials is a promotional or marketing tool that presents a snapshot of your company. It essentially serves as a resume for your business.

Capability statement –  Similar to above but is usually tailored to the audience or the contract requirements, and describes the business’ capabilities and experience, including who you are, what you do, and how you are different from your competitors.

7

TERMS & DEFINITIONS

ASL – Approved Supplier List

EOI – expression of interest: a business expression indicating an intent to bid

IFB – Invitation for bids: is an invitation to contractors or equipment suppliers, through a bidding process, to submit a proposal on a specific project to be realized or product or service to be furnished

ITT – Invitation to tender: is a special procedure for generating competing offers from different bidders looking to obtain an award of business activity in works, supply, or service contracts.

PQQ – pre-qualification questionnaire: a series of questions for potential tenderers to answer regarding their level of experience, capacity and financial standing.

ITV – Invitation to vendors

RFA – request for applications

RFD – request for documentation

RFI – request for information: is a standard business process whose purpose is to collect written information about the capabilities of various suppliers. Normally it follows a format that can be used for comparative purposes.

RFO – request for offers

RFP – request for proposal

RFQ – request for quotation or request for qualifications

RFN – request for negotiation

RFS – request for services

8

TENDER PROCESS

Pre-Tender

• EOI• Tender

Documents

Tender

• CFT / CFB• Tender• Tender

Addendums• Close Tender

Evaluation

• Tender Opening

• Tender Evaluation

• Tender Interviews

• Tender Recommendation

Award & Contract

• Preffered Tender

9

BIDDING PROCESS Te

nder

Announ

cem

ent PQQ

EOIRFI

Op

port

unit

y

Evalu

ati

on Technical

FinancialApproval

Bid

Pre

para

tion Pre-job

Technical OfferFinancial Offer

Contractual Terms Review

Amendments & Follow up

DocumentationFinal Review

ApprovalSubmitting

Follo

w U

p Meetings & Interviews

Negotiations

Aw

ard

ing Award Letter/Note

Contract Signature

Commencement

10

EVALUATION OF BIDS

Opening of Bids

Examination of Bids

Requests for Clarification

Evaluation & Comparison of

bids

Post-qualification

Award Recommendat

ion

Bid Evaluation Report

Notification of Award

11

EVALUATION OF BIDS

Opening of Bids

The opening of bids should take place immediately after the deadline for submission in the presence of bidders’ representatives who wish to attend.

Bids, modifications and withdrawals received after the deadline must not be opened.

The outer envelope of these late bids and modifications should be opened first and the names of the bidders submitting late bids or modifications read out and recorded. The inner envelopes of all late submissions must be returned unopened to the respective bidders.

Withdrawal notices received prior to the deadline should be opened next and read out

and recorded.

Bids which are the subject of a withdrawal notice must not be opened and must be returned unopened to the respective bidders.

All bids and modifications received prior to the deadline must be opened next.

No bid shall be rejected or an opinion/judgment voiced as to its responsiveness at the bid opening, except for late bids.

Immediately after the opening of bids, all bids which were opened must be stored safely and confidentially and be made available only to those directly involved in the evaluation process.

12

EVALUATION OF BIDS

Preliminary Examination of Bids

Each bid will be examined to determine if it: is properly signed and accompanied by a power of

attorney; is accompanied by the required bid security; is complete and generally in order (if not, any

omission must be noted); is substantially responsive to the bidding

documents (if not, any deviations, omissions or variations must be noted);

is free of computational errors (any such errors must be noted); and

requires any clarifications (any such clarification must be noted).

The evaluation committee must decide which deviations (including omissions and variations) or reservations identified at this point are material and therefore the relevant bids should be declared as not substantially responsive. If a bid is not substantially responsive, it should be rejected and cannot be made responsive by correction or withdrawal of the nonconforming deviation or reservation.

At the end of this stage, the committee should be agreed on: those bids which are substantially nonresponsive

and should not be considered further; and any clarification which should be requested from

bidders.

The outcome of the examination should be summarized

13

EVALUATION OF BIDS

Requests for Clarification:

All requests for clarification must be made in writing, and the response must also be given in writing.

A log of all requests for clarification and responses must be kept.

Requests for clarification can be sought at any time, up to the contract award decision.

14

EVALUATION OF BIDS

Evaluation and Comparison of Bids Bids which have not been declared substantially nonresponsive will then have to be evaluated in depth. Before a bid can be evaluated the following must be done: computational errors must be corrected in

accordance with the relevant provision in the instructions to bidders;

bid prices must be converted to a common currency in accordance with the relevant provision in the instructions to bidders;

adjustments should be made for any obvious omissions, deviations or variations which are not considered to be material and which can be quantified;

the adjusted bid price resulting from the above would constitute the basis for the subsequent evaluation and comparison of bids.

The detailed evaluation of a bid involves first checking that the technical characteristics, functional performance and commercial conditions of the bid are in accordance with the bid requirements.

The next step is to apply the evaluation criteria specified in the bidding documents and adjust each bid as appropriate using the evaluation criteria. Only the criteria specified in the bid document can be applied. No new criteria must be introduced at evaluation,

and the specified criteria must be applied wherever appropriate. Specified criteria cannot be waived during evaluation.

.

15

EVALUATION OF BIDS

Evaluation and Comparison of Bids Where there are a large number of bids to be evaluated (over six) and the spread of bid prices is relatively wide, it is not necessary, in the first instance, to evaluate all bids in detail. One can usually determine, from the specified evaluation criteria, the range of bid prices relative to the lowest bid price which stand a reliable chance of being the lowest evaluated bid. In such cases it is recommended that, in the first instance, only those bids within this range should be subjected to a detailed evaluation. If the lowest priced bid is rejected during evaluation, the range must be predetermined, and all bids in the revised range must be subject to a detailed evaluation.

The adjusted bid price of each bidder will require adjustment in accordance with the evaluation criteria in the bidding documents, in the manner and details specified therein, to arrive at the evaluated bid price.

The evaluated bid prices are compared and ranked in ascending order to determine the bidder with the lowest evaluated price.

16

EVALUATION OF BIDS

Post-qualification A successful bidder must be qualified to satisfactorily perform the contract.

Therefore, it must be determined whether the bidder offering the lowest evaluated bid is so qualified.

If bidders were prequalified prior to bidding, then a simple check should be made to determine that the lowest evaluated bidder still satisfies the qualifying requirements specified for prequalification.

If no prequalification was done, then it must be determined that the lowest evaluated bidder has the relevant previous experience, and financial, technical and production capability and capacity to perform the

contract. This must be based on the qualifying criteria specified in the bidding documents.

A positive determination is a prerequisite for the award of the contract to the bidder.

A negative determination must result in rejection of the bid; in which event, the committee must proceed to the next lowest evaluated bid to make a similar determination of the bidder’s capabilities to perform the contract satisfactorily

17

EVALUATION OF BIDS

Award Recommendation

The successful bidder whose bid has been determined to be substantially responsive and has been determined to be the lowest evaluated bidder and who has been determined to be qualified to perform the contract satisfactorily, must be recommended for award of the contract.

18

EVALUATION OF BIDS

Bid Evaluation Report A bid evaluation report with the award recommendation must be prepared.

The bid evaluation report should reflect the logical sequence of the bid evaluation process in the following manner: receipt and opening of bids examination of bids substantially nonresponsive bids correction of arithmetic errors currency conversion adjustment for nonmaterial deviations bids subject to detailed evaluation evaluation of bids

comparison of bids lowest evaluated responsive bid post-qualification award recommendation

The bid evaluation should be prepared in the format outlined in the Model Bid

Evaluation Report in the manner and detail outlined therein, including all forms and annexes.

19

EVALUATION OF BIDS

Notification of Award When the award recommendation has been approved, a notification of award (letter of acceptance) should be sent out immediately to the successful bidder.

Negotiations must not be held with the successful bidder with the intention of getting a reduction in price or a change in the scope of the contract.

Negotiations are only allowed under exceptional circumstances and with the Bank’s prior concurrence.

20

THANK YOU …

References

"Definition of bidding in English". Oxford. Retrieved 29 March 2014.

"Bidding at Auctions". Auction Bidding. Retrieved 31 March 2015.

"Bidding Terminology". Auctions UK. Gauk Auctions. Retrieved 31 March 2015.

Evaluation of tenders and preferred bidder selection