Give us a missed call on

+91 626 955 5606

Table of Contents

Tendering is not a new concept in India. For years, businesses have discovered new opportunities with government tendering. Today, though the tendering process is carried out primarily online, there are still questions about what is tender? How is e-tendering different from traditional paper-based tender process? What are the advantages of e-tenders? We answer these vital questions for a clear understanding of the meaning of tenders, its benefits, application process, types and more. But first, let us start by looking at what is a tender?

Advertisements
Tenders

What is a tender?

Let’s first look at the definition and meaning of a tender. A tender is a formal, structured invitation (in the form of an RFP or tender notice) to suppliers to bid for the supply of products and services. In a tender invitation, the buyer outlines their requirements and requests proposals from eligible and interested suppliers to provide information or solutions at the most competitive prices.

The e-tendering process aims to bring transparency and fairness to procurement for the government and private sectors. It fosters competition, promotes equal opportunities, and support economic growth by creating a level ground for small businesses to participate and build their credibility.

Government vs Private sector tenders

In India, tenders are a popular form of procurement for the government and large businesses. This allows them to seek bids from genuine suppliers and keep procurement a transparent and fair process. Government tendering is usually carried out online (e-tendering) through the official state and central government procurement portals, which further enables the tendering process to be agile, transparent, and fair.

To understand what is tender, with reference to government and private sector tenders, let’s take a look at the list below highlighting the main differences between them.

Particulars Government tenders Private tenders
Purpose and scope Focused on projects with public impact e.g., infrastructure development projects like roads, bridges, building construction, railways tenders, etc. Driven by the interest of the business and targeted at specific products and services tailored to meet a current business interest.
Announcement type and by Tender notice announced on the CPPP or GeM portal or individual government portal. Announced by government ministries, departments, and organisations (central, state and local bodies). Can be limited to a specific supplier group or through direct invitation. Announced by procurement or other departments depending on the structure of the organisation.
Regulations and governing Governed by strict tender regulations and legal requirements. The tender notice elaborates all details and highlights the T&Cs, including payment terms, terms of acceptance, quality and other details. Less regulated. The terms, procedures and requirements are detailed by the organisation. Reasonable flexibility in selection method and other criteria.

Type of tenders and what it means

Now that we have defined and explained what is a tender, let us now take a look at the different tender types that government and private procurement entities use.

There are four types of tenders that you should know about:

  • Open tenders – The most commonly used type of tenders, open tenders are open for all eligible bidders to bid. Though this naturally steps up competition, it’s also a fair process that gives opportunities to all business to participate in the e-tendering process. Government civil works tenders, engineering tenders, construction tenders are usually floated as open tenders to encourage regional and local participation as well.
  • Closed tenders – Also known as selective or limited tendering, these invites are sent to a selected supplier/vendor group. These vendors have a proven track record and are required to share bid proposals based on the specific requirements. Though competition is less, it’s within a specific group with niche skills and competence, making it often difficult to quote a competitive quotation.
  • Negotiated tenders – Here, the buyer authority invites proposals from a single entity only. This is often used when the tender is an extension of an existing contract and the vendor/supplier has a specific expertise required to carry out the job. Since the invite is to a single entity, the terms and conditions are negotiated directly.
  • Single and two staged tenders – A single-stage tender is one in which once the vendor submits a quotation, it cannot be changed. A two-staged tender is a more collaborative approach where in the first stage the scope and work requirements are finalised, and in the next stage, pricing and financial details are fixed.

Pro tip: When going through a tender notice / tender advertisement, check for ‘Open Tenders’ that are open to the public for bidding.

What is tender vs bid vs quotation vs contract

The terms bid, quotation, contract and tender are commonly users words. These are specific terms and have different meaning and usage. Since we understand what is tender, let us also understanding the meaning of a bid and contract, and how they are different from a tender.

Meaning and basic difference – Tender vs Bid vs Quotation vs Contract

Term Meaning Difference
Tender Buyer’s formal invitation for proposal for the supply of goods and services at the most value-for-money rate. It’s a formal invitation with all information on requirements, eligibility, timelines, payment terms, etc. properly described and detailed out.
Bid Seller’s competitive price offer for the supply of goods or services. Part of the bidding process, where the seller/bidder shares a competitive price.

(Also read: Difference between a tender document and bid document)

Quotation The fixed tender price quote (proposed) in response to a tender for a service or supply of goods. An estimate (usually fixed) provided by the seller on the cost before finalising any formal agreement.

(Also read: Difference between tender and quotation)

Contract Formal agreement (legally binding) between the buyer and seller on the terms for providing goods or services. The final agreement with details on the agreed upon SLAs and deliverables, binding on all parties.

(Also read: Difference between a tender and contract)

Why tendering is good for business? Benefits and Advantages

Government tendering has several advantages, especially for small businesses. Let’s take a look at some of the common benefits of e-tendering for SMEs:

1. New business opportunities (equal, fair, transparent):

The government e-Procurement system is designed to keep the process fair, transparent and open to all eligible bidders. Large businesses, SMEs and startups can participate in tendering if they match the requirements. Also, to encourage higher participation from MSMEs, there are additional benefits provided, such as exemption from paying EMD (for micro and small businesses).

This naturally keep competition healthy with all parties being able to compete in the bidding process for new opportunities.

(Also read: Can start-ups participate in government tenders).

2. Revenue generation and stability

Government contracts are binding on all parties. This means that payment terms provided in the contract will have to be followed by the buyer. Winning a government tender therefore ensures that there will be steady and timely revenue generation without fear of default.

Moreover, since government projects can be for short and long term, this can be additionally beneficial for SMEs as they can stabilise their income for the long as short term based on the duration and nature of the contract.

3. Building trust and business credibility

Securing a government project and delivering it on time can build credibility for your business. Considering that government departments are very particular on the quality and standards of the project, delivering a government contract serves as a testament to reliability for your business. This in turn can help you to secure future contracts both from the government and private sectors.

4. Finding new customers and markets

If you are trying tendering for the first time or if you have won a tender for the first time, then you are adding a new customer/client to your brand. This may also come with the opportunity to do business in a new region. Moreover, since tender invites are floated by governments across the country, it also gives you the opportunity to expand your market reach.

However, don’t forget to keep applying for tenders in your state and region and leverage the benefit of being a local bidder.

(Also read: All about lsgkerala government tender portal registration, and eligibility and application for PMC online tenders).

Working on government tenders can be challenging. And this is where small businesses can gain the experience, knowledge and expertise required to work on larger projects in the future.

How to find and apply for government tenders?

Knowing the what is tender and the benefits that come with it is the first step. To leverage it, you will still have to find the right tender opportunities and apply for it in time. Let’s look at them.

How to find government tenders?

There are different ways you can find government e-tenders online.

Central government portals:

State government and department portals:

Trusted tender websites:

Visit Tata nexarc and explore Tenders. You can find over 1.3 lakh+ government tenders in one place. You can filter by location, estimated value, tendering authority, industry and more, to find relevant tenders for your business. Subscribe now.

How to apply for tenders online?

When you look at the definition of a tender, it is clear that there is a bidding process involved. To apply for a tender, you will have to follow the steps below (general guidelines) and bid for it:

  • Download the tender notice from the government portal and read through the tender requirements
  • Understand the requirements to evaluate if you are eligible or not
  • Prepare the tender response, attach all the requested certifications, pay the tender fees/EMD/tender security deposit and attach the receipts, and quote a competitive price
  • Review the tender proposal thoroughly (take help of a bid consultant if required) and submit the proposal as per the prescribed format
  • Check the tender status from time to time to stay updated on the result of the tender application

What is tender bidding for business? Importance and more

We started the discussion with what is a tender and close it with an overview of the tender bid application process. From discovering the right tender advertisement to designing a tender response strategy, tendering requires a strategic approach. Here are some quick tips to help you with tendering.

  • Keep to the timelines (i.e., submit your tender proposal before the closing date) to ensure that your application is accepted and not impacted by technical glitches or any other.
  • Be familiar with the tender terminologies to comprehend the meaning of every item detail listed in the tender notice document
  • Seek professional help (i.e., bid consulting) to write competent tender proposals
  • Register your business on trusted tender portals (e.g., Tata nexarc) to get timely tender updates