eTendering today has replaced the conventional paper-based government procurement systems. Realising the benefits of eProcurement, all government organisations, departments, PSUs, and ministries publish their tender requirements online and announce tender winners on the official eProcurement portal – the Central Public Procurement Portal (CPPP) or the GeM portal (the government eMarketplace). Naturally, the next likely question is – How does tender offers work?
For this article, the meaning of tender offers refers to:
• The tender notice that is floated by the tender authority
• The results of the tender announced by the tender authority
Considering that there are thousands of government tender notices announced every month (central and state) it is vital to understand the steps in tender offer. In short, there are different types of tenders that are announced, each with varying specifications and bidder qualifications/eligibilities. Some tenders have a longer and complex evaluation process, while others have a shorter and simpler process. To identify and announce the tender winner and offer the tender to the winning party therefore is not a one-day process, but a detailed and meticulous one.
Tenders are a competitive way of getting the best bids for goods and services from eligible vendors. Today, both private and public sector companies float tender notices inviting bids. As a business owner, MSME or large scale, understanding the tender offer process will enable you to submit compliant bids, follow up on the tender status, and fulfil the requirements competently.
What is a tender offer?
Let us begin by understanding the meaning of a tender offer. A tender offer or tender notice is an invitation to purchase/procure specific goods and services. As stated previously, all government tenders must be publicly announced on the eProcurement portal for all eligible bidders to apply.
The process involves announcing the tender invitation, accepting proposals from all eligible bidders, evaluating the proposals (on technical and financial grounds), announcing the tender winner, and finalising the contract.
Types of tenders:
When it comes to tender categories, there are different kinds of tenders floated in India:
- Open tenders: An invitation to all eligible and interested parties to bid for the specified goods and services requested
- Closed tenders: An invitation to a selective group of suppliers (i.e., limited audience) to quote for the requested goods and services
- Negotiated tenders: An invitation to a specific company to quote for a tender
- Single-stage or two-staged tenders: The process whereby the Tender Inviting Authority provides complete information to the supplier to get an exact quote and project requirements (single-stage), or a more collaborative approach (two-staged) where a supplier is selected based on the scope of work, project details are shared, and the contract price is negotiated.
How does the tender offer process work?
In this section, we will take a look at the how the online tender offer process works. We will consider the following aspects:
- Tender announcement (by the Tender Inviting Authority)
- Tender application (by different bidders)
- Tender application evaluation (by the TIA)
- Awarding the tender to the successful winner
The first stage involves the Tender Inviting Authority (TIA) floating the tender requirement. This requirement, as published in the eProcurement portal can easily be accessed and viewed by all. The tender document pdf can also be downloaded to view details of the tender. However, to be able to apply to the tender, one must login to the portal. Tender offers usually comes with the following details:
- Tender ID and title
- Opening and closing dates
- List of tender document requirements and submission format
- Tender fee details, Earnest Money Deposit (EMD), and payment terms
- Bidder’s eligibility, qualifications, obligations, and other requirements
- And any other relevant tender detail (e.g., location, type of tender, quantity required, etc.)
The next stage in the e-tendering process is the tender bidding stage, whereby all eligible bidders can submit their bids online. You will have to register and login to eprocure.gov.in or the GeM portal and have a class 3 Digital Signature Certificate to start bidding.
Writing a tender proposal is often considered the most important stage of the bidding process. Care should be taken to keep it compliant, consistent, and accurate. Ensure to respond to all sections, avoid typos and misspellings, and provide all relevant details such as details on projects completed, current projects, team size and skills, company licenses, industry certifications, documents (e.g., GST certificate, Udyam registration certificate) etc. Pay the tender fees and/or EMD as requested before time to avoid last minute payment challenges. You should also take care to upload tender documents in the requested format within the due dates (usually PDF for documents and excel for BOQ). File naming convention should also be followed.
• Ensure to keep your mobile number and email address active to receive all tender related communications
• Do not forget to click on ‘Freeze’ or ‘Freeze bid submission’ button to finalise your tender application submission
• No changes can be made to the quotation once the bid is submitted
Tender application evaluation
In the next stage, the quotations submitted for the tenders are evaluated by the TIA. This stage usually comprises of two stages – first, evaluating the technical aspects of the applications submitted, and second, evaluating the financial aspects (i.e., the tender cost sheet or BOQ).
In most cases, there is a pre-qualification done to shortlist eligible bidders.
- Technical bid evaluation: Details on organisation’s capability and capacity, required experience and skills, quality check and safety/health protocols in place, technical solutions offered etc. are evaluated. Points are added against each criterion (0 to 10) and based on the overall points scored, bidders are qualified (or not) for the next stage.
- Financial bid evaluation: The financials or tender price quoted is evaluated in this stage (ref. BOQ document). Based on the quotes made, bids are labelled as L1, L2, L3 with L1 being the lowest bidder.
Tender awarded to winning bidder
The tender is awarded to the winner based on the value the bidder brings. It may or may not be to the lowest bidder as several other factors are considered before awarding the tender. In most cases, once the top bidders are finalised, the TIA calls for a discussion to clarify queries (both ways). As a bidder, it is recommended to have inputs from key departments (e.g., finance, procurement, technology, operations) in place before attending the meeting.
Post the discussions, the TIA announces the results of the tender and the same is updated on the eProcurement portal as well. In several cases, the participating bidders can check to understand why their bids were rejected, or even request refund of fees/EMD as specified. The winners are usually informed via email and/or phone update as specified.
In case the winning bidder is unable to accept the tender offer there is a timeline and further processes in place for it.
Advantages of online tender offer announcements
As can be guessed there are several benefits of taking the entire eTendering process online. For one, it keeps the entire process transparent, making it possible for all eligible bidders to compete equally for relevant government tenders.
Some of the prominent merits of eTendering includes:
- Process efficiency: Less paperwork and documentation, and digitisation helps to reduce errors and keep the process efficient (e.g., the use of DSC to validate bidder’s identity), while reducing costs and expenses.
- Larger pool of bidders: Online access to tender information and bid submissions reduces the need for being physically present. Hence, allowing tender applications from more bidders and keeping the tendering process competitive.
- Simplicity: No complicated processes or navigation to find and apply for tenders. Bidders can also avail help desk support or check the bidder’s manual kit for additional information on how to apply for tenders.
- Agility: eTendering makes the bidding process fast. Since the entire process is carried out online, all timelines are met, and communications are instant. e.g., receiving instant communications upon paying tender fees online, or checking tender status online or the results of a tender.
- Timely communication: All notifications are made in time via the registered email and phone numbers and also published on the portal. This ensures that all bidders are updated on the developments of the tender.
- Fair assessment and tender award: Online bid submissions make it possible for TIAs to evaluate each bid fairly. Contrary to popular myth, the bids with the lowest quotes don’t always win the tender. The TIA evaluates all specifications and measures them before awarding the tender offer to the most suitable bidder.
Tendering has been one of the most lucrative and practical ways to accelerate growth. With eTendering, the government aims to encourage more businesses, especially MSMEs and start-ups to participate in government contracts. The process is simple, straightforward, and designed to keep the process fair and open to all.
Note: This article is for information only. For the latest details on the tendering processes, readers are advised to check the official eProcurement portals.