Why your tender application got rejected? Exploring the reasons of tender rejection

So, your tender application got rejected? Every month, government departments, PSUs, and ministries float thousands of tenders for eligible bidders to bid for. And though competition is high, and thousands of applications come in, it can be awarded to only one bidder. So, what makes a winning tender or what makes a tender fail?  

In general, there are several reasons of tender rejection. While in most cases, the tendering authority informs and gives feedback on why tenders are being rejected, it is a good practice to know of the tender rules and regulations and grounds on which your tender application can be rejected and you can lose a bid.  

With the right resources and structure in place, you can write an effective bid proposal for GeM and CPP portal tenders to increase your chances at winning.  

On that note, let us try and decode and understand the factors for tender bid proposal rejection.

Reasons why tender proposals are rejected  

Government e-Procurement today is an online procedure. The process was initiated to bring transparency, reduce errors, and increase agility. 

Today, all tender notices are available on the Central Public Procurement portal and the Government eMarketplace (GeM). This enables eligible suppliers view all information, check eligibility, due dates, special requirements, and other details and bid if suitable. 

Listed below are some of the reasons for rejection of tenders in India.

1. Incorrect documentation 

We cannot emphasise on the importance of proper documentation for tendering. Of all the reasons why tenders are rejected, improper documentation is the most common reason. Tender applications and bid proposals have to be written and submitted in the prescribed format, within the due dates, along with the tender feeds and Earnest Money Deposit (if requested). Failing to abide by the rules and regulation for tender documentation will automatically lead to tender rejection. 

In general, the list of tender documents required for bid proposals include: 

• Scanned copies of business PAN card, Aadhaar card, business address proof, financial statements, GST returns for specified period, bank account details, MSME Udyam certificate (if applicable), etc. 
• Duly filled in BOQ Excel (Bill of Quantity), scanned copies of tender fees/EMD payment receipt 
• List of projects completed (for specified period) to prove expertise and experience, references, certificates (e.g., ISO certification for tendering, FSSAI, technical certificates etc. as applicable for product quality, safety, and health compliance), details on team size and skill set etc. 
• Duly filled in tender document form, including charts/graphs and all requested details 

Tenders usually come with generic and specific requirements – all of which are mentioned in the tender document PDF that can be downloaded from the eProcurement site. The tendering authority will study every application in detail and reject any application that does not comply.  

Note: It is important that you upload the documents in the specified format (e.g., PDF, Excel, PNG, JPEG or any other).   

2. Non-competitive pricing 

This is incorrectly believed to be the most obvious reason for losing a tender bid. Most bidders believe that government procurement contracts are awarded to the lowest bidders (i.e., L1, L2, L3). This however is a myth. In general, the tender is awarded to the most eligible bidder providing value-for-money. 

There is a systematic tender evaluation process that accesses bids on technical parameters first, followed by financial aspects. As such, if your bid proposal does not qualify the technical round of evaluation, the financial aspects will not be considered.  

This is done to ensure that bidders are adhering to product quality, safety and health guidelines, and meeting the technical and design requirements of the project. This naturally creates a competitive environment and creates a safety net as bidders cannot compromise on product quality and have to quote a price accordingly.  

It is recommended to conduct research on market rates before you quote a price for tender to avoid tender bid rejection. Listed below are three step you can take to ensure your tender quote is competitive, profitable for you, and can win you the tender: 

• Consider all factors (e.g., product, logistics, resources, IT, infrastructure, warehousing, inflation etc.) and prepare a cost sheet  
• Study previous tender winning bids to understand the winning bids 
• Take the help of professional bidding services to ensure that your quote is neither too high nor low  

While winning the tender might be your business end goal, it makes little business sense to quote a price that will not help you be profitable.

3. Tender eligibility criteria not being fulfilled 

This may come as a surprise, but many times tender applications fall short of meeting the basic eligibility requirements. As stated previously, all tenders come with specific requirements and eligibility criteria. It is expected that bidders will read the requirements and apply only if eligible. If not, the tender application will by default get rejected. 

There are some common eligibility criteria for government eTendering and some specific to the project and tendering authority.  

For instance, in the case of railway tenders in India, a bidder must have completed one or more similar projects in the last seven years. These projects must have amounted to at least 30% or 40% or 60% of the value of tender in consideration.  

4. Work experience failing to build confidence 

The people selecting or rejecting your tender application are individuals in the end. And what matters is that your application should be able to build confidence in them regarding your capabilities of successfully carrying out the contract.  

This can be for several reasons, such as: 

• Not demonstrating enough work experience in the past 
• Not having the right team size, skills, technical knowhow, infrastructure, and competence to work on the project 
• Not having worked in similar projects/industries  

This is a challenge and a potential reason for bid rejection. Most high-value tender authorities prefer to award contracts to businesses that have suitable past experience and a good track record of delivering projects in time. For example, closed tenders where the tendering authorities invite selected suppliers with proven track record to submit a quotation, or even a negotiated tender. 

Solution: How to solve for lack of previous work experience?

For a MSME business, this is one of the disadvantages of tender – rejection due to lack of proper work experience. While there is no instant solution to the problem, here are some steps you can take to reduce the impact: 

• Always start by exploring local or small-value tenders for start-ups and MSMEs. In general, almost 20-25% of all government contracts are awarded to small businesses. These tenders have more relaxed and flexible criteria and MSMEs stand a better chance at winning them. 
• Explore sub-contracting options, i.e., working on a part of the project. This will help you to build credibility and trust for your brand. 
• Register your business on the GeM portal as a seller and try to get direct purchase orders on GeM. The GeM portal works as a government e-marketplace and government departments can buy directly from registered sellers for up to ₹25,000. While the value is not high, it will help you build a promising client list. 
• List relevant projects in your tender application. You have to decide smart as to which projects you will list in your tender application. Consider listing projects on parameters such as: similar industry, project scope, value, timelines etc. This will give trust to the tendering authority that you have the skills and capabilities required to undertake the tender opportunity. 

 

Next steps: What to do when you lose a tender bid? 

You prepare and try again – it’s that simple. 

You must understand that there are thousands of bidders bidding, many of whose applications will be more suitable and eligible than yours. Though you may meet all the eligibility criteria and write a compliant bid proposal, you may still lose out to some other bidder.  

It is recommended in such cases to take feedback for tender rejection. Getting unsuccessful tender feedback will help you to learn why your tender was rejected and prepare better the next time.  

Keeping up with its objective of keeping eTendering transparent, the tender authority usually shares feedback on tender rejection to bidders. The tender bid rejection letter structure and content may vary depending on the tendering authority and reasons for rejection, but it outlines the key reasons for it, such as RFP non-compliance, lack of experience, unsuitable tender price quote or any other. 

If you are bidding for the first time, it is likely you will make errors. Timely feedback on tender rejection reason, will help you deal with errors in your tender bid and prepare better for the next time.