How to Tender
What is a tender?
A tender is an offer to do work or supply goods at a fixed price. The tender or bid process is designed to ensure that the work to be done is given out in a fair way. Although price is very important in the decision on which tender or bid to accept, it is not the only factor taken into account. Each client or government department calling for tenders does so according to its rules for tender adjudication or procurement policy. Once the client entity accepts a tender, it is binding on both parties. This means that the person or company that won the tender has to provide the goods or services in the manner agreed to and at the price offered, and the client entity must pay the agreed price at the agreed time. In other words, once accepted, a tender is a binding business contract. Even if you fail to win a particular tender, simply writing and submitting the tender can clarify your aims, strengths and weaknesses. By asking for feedback on your bid, you are able to learn from the experience. It raises your profile with the client and helps you understand the client’s needs. Tenders in South Africa are a lucrative source of income for small business, but can be challenging to win. Getting the process right not only saves time and effort but creates the potential to establish additional income streams.
How do you find out about tenders?
Tenders are published in a wide variety of places. In 2001 when Tenderservices began, most tenders were published in the newspapers. Today, most tenders are published online on client websites. This means that searching for tender advertisements is a major undertaking for companies and professionals who need to tender for work. Alternatively, one can subscribe to tender services (like Tenderscan) in order to obtain the latest tender notices as soon as they are published. The Tenderscan service includes searching and matching the tenders that are relevant to your business. These tenders are then emailed direct to your inbox on a daily basis.
Key points to consider
- Are you able to get hold of the bid documents and analyse them within the time provided?
- Are you able to match the technical, skill and experience required?
- How much will it cost to prepare your bid?
- Would the work fit in with your strategy and positioning of your business?
- Would the costs of fulfilling the contract be too high to make it worthwhile?
- How would the contract affect your other work, or affect your staffing and ability to take on other new business opportunities?
Collection of tender documentation
In order to get the tender document, check the tender advert and phone the contact person. There is no point in trying to decide whether to tender until you have read and understood what the tender is about by reading the tender document.
Finding out what the client really wants
If the tender document is unclear, you should always raise questions by phone or email. Site inspections are one way in which clients are able to disseminate information on the project to the interested bidders. Such briefings enable bidders to ask questions in order to clarify what is required. Some site meetings are compulsory, which means that by not attending the meeting you will automatically be disqualified from tendering. Therefore, check the tender advert as soon as it is released, and clarify how to attend the site inspection by telephoning the client and requesting confirmation of the site inspection details.
What to put in your tender proposal
- Focus on the client. Talk about the client’s needs and how you can solve its problems. When you write about yourself, it should be to prove you have the skills, experience and the organization to fulfil the client's requirements.
- Help the client by coming up with ideas - from alternative ways of doing things to how to tackle possible worries about future maintenance and staffing implications.
- If the client has provided a prequalification document, make sure that you cover everything in the document.
- Value for money decides most bids, not simply the cost. Mention aspects of the work that the client is unable to do with its current work force. Emphasise business benefits, service improvements, risk reduction, low maintenance, high quality, reliability, plus lifetime costs.
- Analyse all the cost and pricing factors of the contract. Do not ignore long term costs such as wages for staff who could be working on something else. Spell out all the costs.
- Contract management. Demonstrate that you have the resources to do the work in a cost-effective way to meet the client's needs, meet the set deadlines, and respond flexibly to changing situations.
- Show that you have thought about and can manage potential financial, commercial, and legal risks that could cause contract failure.
- Provide details of your team. Emphasize strengths - CVs should highlight successes with similar projects, as well as qualifications and experience.
Compiling your tender submission
Please remember that the tender has a closing date. This is a very firm deadline and no late tenders can be accepted. Bids in South Africa must be in writing. Each tender has a number of associated forms, which must be filled in and submitted to accompany your tender. The specific forms you need to submit will be listed in the tender documentation. Consider very carefully how you fill in these forms. If you are unsure of anything, make sure you obtain advice on how to fill them in.
Additional forms that need to be submitted for government tenders in South Africa:
- Tax Clearance Certificate
Your tax status must be in order before your tender can be considered. If your tax clearance certificate has just been obtained, then it should suffice. However, the tender document has an 'Application for tax clearance certificate' form attached to it. If the tax clearance certificate is old, then you need to obtain a new one by filling in this form. Once you have completed this form, you must hand it in at your nearest South African Revenue Services (SARS) office, in order to get a tax clearance certificate. You must then attach the original tax clearance certificate that you get from SARS, to the tender or bid documents. This certificate serves as proof that you are not in arrears with your tax payments. - Price and motivation
How to fill in this form depends on the subject of the tender. On this form, you are required to explain how you arrived at your price, by describing the product you will supply, and how long it will take the members of your team to perform the service. This form is often amended for the particular tender, so carefully check which one you need to complete. - Declaration of Interest
This is the document in which you declare whether or not you have a relationship (friend, family, business leads) with anyone who works for government. This is so that people who are involved in awarding the tender do not favour their friends and family, i.e. to prevent corruption. - Preference Certificate
You must fill in this form even if you are not claiming preference points, such as for local small businesses, previously disadvantaged individuals, etc. - Contract form
This is the contract that binds you and the client should your tender be successful. There are a number of different forms for the various kinds of contracts.
There may be other forms to fill in for specific tenders. All the forms should be included with the tender or bid that you submit.
Writing your tender
Make sure that your tender matches all the bid specifications and answers all the issues or questions raised. Summarise your bid and explain how it meets the client's requirements. Write the summary last, but include it at the beginning of your tender.
Clients will also expect you to:
- State the purpose and origin of the bid
- Summarise your work as a contractor, past experience and credentials for this job
- Say how you will carry out the work, and how and when the tender will be completed
- Explain the benefits and value for money of your bid
- Detail when and how goods and services are to be delivered, and provide a timetable for delivery
- Demonstrate your team's skills, experience of similar work, as well as each member’s responsibilities if you win the contract
- Explain how you will manage the project
- Give details of your pricing and any aftercare arrangements within the price
- Be practical and identify potential problems without promising anything that is clearly impossible for you to deliver
- Include a covering letter that responds to the bid invitation, summarises your main message
- Describe how the documents of your bid are organised.
Delivering your tender
Once you have all the forms completed and signed, place your tender in an envelope with the tender number on it and deliver it before the closing time. You should deliver it to the place specified in the tender document. At the delivery point, tenders are opened and respondents are allowed to attend the tender opening process. All government tenders in South Africa are opened in public where the name of the company is announced, usually with the tender prices.
Follow-up your submission
After you have submitted your tender, it is always a good idea to follow-up the submission by phoning the client so that you know how far the client has gone in the adjudication process. It is important to be courteous to the person on the other end and to indicate that, should they need any further clarity, how they can contact you. This also shows to them your commitment and eagerness to win this tender.
You may be requested to perform a presentation to the client. The quality of your presentation is vital. Prepare yourself well, know your responses inside and out, and speak confidently. You need to prove to your client that you have the skills and capacity to deliver the project as per your tender proposal. The client may require further clarity at this meeting, so there may be questions asked. Prepare well and answer questions to the best of your ability.
Contract awarded
After the adjudication process, the client will award the project to either a single company or a consortium of enterprises, or may even not award the tender. If you are awarded the tender, you need to respond to the client by confirming your letter of appointment. Part of this process will entail setting up a kick-off meeting with the client. Be pro-active, take charge and show your client that you know what you are doing, and that you are committed to deliver a quality project on time and within budget.
If you are not awarded the project, you can query the reasons why you were not selected. This always helps for future tenders. It is important to remember that you will not win every tender that you respond to. It stands to reason that if 20 companies submit tenders, 19 will be disappointed. But, if you lose, do not be disappointed: treat it as a learning experience.
Tips for tendering
The following are common mistakes made when tendering:
- Non-submission of necessary forms. Do not forget things like your tax clearance certificate and shareholding certificates. Note: out-dated tax clearance certificates are also not allowed.
- Incorrect calculations of tender prices. Check and DOUBLE-CHECK your calculations!
- Often, bidders misinterpret the scope of the work. If you are unsure of anything in the tender, be sure to ask.
- Unsigned documents. Always sign your bid document, as unsigned documents are unresponsive and will therefore be disqualified.
- Missing preference points. If you are an HDI, remember to claim your points. Points unclaimed are points lost!
- Deliver to the right place and on time. Make sure that you drop the tender into the right box, before the closing time. By law, no late bids will be accepted, not even 1 second past the closing time.
- Insufficient samples provided. If samples are requested, sufficient amounts must be supplied to enable the item to be evaluated under the appropriate technical or clinical conditions. Ensure that any requirements related to compliance with SABS specifications are met.
Tips from the procurement officials:
- Always read through the bid documents carefully.
- Complete the document in full.
- Do a proper cost analysis when calculating your bid prices. Bids calculated too high or too low are considered unresponsive.
- Enquire about the bid and obtain all the relevant information before completing the tender document.
- Feel free to ask why you were unsuccessful, so that you may learn from mistakes made.
- Make sure that you are able to meet all the requirements within the specified time and are able to honour your offer in the event that your bid is successful.
- Do not make any misrepresentations or false statements in your bid documentation. It is a legal document and therefore enforceable by law.
- Quality services and products will improve your track record and good standing with the department. Poor delivery creates a negative impression not only for your business contacts but for small businesses in general.
