Tenders can be open, restricted or selective , where the supplier may be self-selecting or already known to the purchaser. Other forms of tendering enable the purchaser to engage the supplier in a negotiation, which is an exception rather than a rule.
Supplier Tendering Evaluation
When you are selecting potential supplier for business purchasing, you need to first issue tendering to your selected suppliers. there are some general guidelines for tendering issuing and evaluation:
- Ensure suppliers are treated equally by providing all tenders with the same information.
- Be dear about the evaluation criteria at the outset, specifying commercial, technical and financial terms.
- Evaluate on the basis of commercial compliance, including any acceptance of terms and conditions specified, delivery, payment arrangements, ownership, etc.
- Evaluate on the basis of technical information relating to specification of goods, services and their value, including performance, standards, quality, operation/maintenance, standardization, support services, consumables, training, sampling, warranties.
- Evaluate on the basis of financial costs and benefits, including life cycle cost, quantifiable benefit, fixed and variable pricing, component/spare part costs, current conversions, financial risk analysis.
- Compare tender documents received.
EU directives suggest that negotiation may occur when there are irregularities in the tendering process, when the tender cannot be complied with or when the supplies are for developmental purposes . Since tendering is not always viable, because of cost, time factors and rigorous procedures, post-tender negotiation is a way that organizations can build some flexibility into the tender process.
Tendering Process and Negotiation Preparation
In preparation for negotiation, problems may arise from the tendering process because of the inter-relational distance between the purchaser and the supplier: the lack of contact between the parties immediately restricts a key source of information. Nonetheless, there are circumstances where accountability is a primary concern in the process, arising from different corporate governance systems, such as a public sector organization seeking private sector suppliers of some product or service. The process of tendering, therefore, overcomes some of the questions that may be asked as a result of public scrutiny in the ultimate selection.
Following the tender process, purchasers may enter into a negotiation with the ‘best’ supplier and, possibly, those closest to them, so long as other renders are not disadvantaged . Negotiation at this stage is intended to gain further quantifiable benefits and value for money. Any and all terms identified in the original specification are negotiable but, as the cost of negotiating may be high , a careful judgment needs to be made on the likely value of any benefit which might be gained.