Why your tender application got rejected? 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 thousands of applications come in, there are several tender rejections to ensure that the tender is awarded to the most suitable bidder. So, what makes a winning tender or what makes a tender fail? There are several tender rejection reasons that goes beyond being the L1, L2 and L3 bidder. Let us understand them. 

Note: To minimise the tender rejection rates and increase relevancy and competitive bidding, in most cases, the tendering authority informs and gives feedback on why tenders are being rejected. It is therefore recommended to know of the tender rules and regulations and grounds on which your tender application can be rejected and you can lose a bid. 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. Today, all tender notices (e.g., PWD tender notice) are available on the Central Public Procurement portal, the Government eMarketplace (GeM), and other state/PSU portals (e.g., Kerala LSG tender portal). This enables eligible suppliers view all information, check eligibility, due dates, special requirements, and other details and bid if it’s relevant. 

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

1. Incorrect documentation 

One cannot over emphasise on the importance of proper documentation for tendering. Of all the reasons why tenders are rejected, improper documentation is the most common reason. All government tender notices come with details on technical and financial documents required to be submitted. These can be on the bidding company’s work experience, expertise, financial statements, etc. Moreover, bid proposals have to be written in specific formats and submitted with documents in the right file size, format, and naming. Failing to to do so 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 

Note: It is important that you upload the documents in the specified format (e.g., PDF, Excel, PNG, JPEG or any other). The tendering authority will study every application in detail and reject any application that does not comply. Also, the technical bid document is usually opened first.  

2. Non-competitive pricing 

It is often believed 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, it is imperative that you meet the technical requirements first, that is, the tender inviting authority should be confident that your company has the capabilities to carry out the project successfully to completion, meeting all quality and safety standards and health guidelines. 

This creates healthy competition and a safety net as bidders must ensure quality and quote 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 provides value  

One of the reasons for tendering for you is business growth. So quote intelligently, so that the opportunity is profitable to you and enables you to grow your business.

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. Tenders come with specific requirements and eligibility criteria. It is expected that bidders will read the requirements and apply for relevant tenders only to reduce tender rejection rates. 

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 

A common reason for not participating in tender is when the work experience is insufficient and fails to build confidence in tender authoriries regarding your capabilities to successfully carry 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. (Read more about different kinds of tenders)

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

• 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 lesser tender rejection reasons. 
• 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. 

Note: The CPP portal and GeM portal tender search are designed to help you find tenders by city, state, industry and other parameters to help you check relevancy and apply for tenders reducing your reason for not participating in tender.

What to do when you lose a tender bid? 

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

Though you may meet all the tender 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 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.