What is a tender contract? Here’s everything you need to know

Are you searching for answers to ‘what is a tender contract?’ We’ve put together a blog to talk about tender contracts and how we can help you win one. The tendering process may seem tricky to beginners as there’s a lot of information to digest. To make the process easier, we’ve put together this blog to explain more about ‘what’s tendering?’ and ‘what is a tender contract?’

First of all, what is a tender contract?

A tender is a written document that is sent out to potential suppliers who are looking to tender for contracts. A buyer will release an invitation to tender (ITT) when they are looking to outsource a solution to a supplier. This document asks for information from prospective suppliers. The suppliers must put together a bid response detailing how they will deliver the contract.

Terminology used in tender contracts

Still have questions about what is a tender contract? Worry not, next we’ll take a look at terminology and phrases you can expect to see in a tender contract.

• Pre-qualification questionnaire (PQQ) – Stage 1 questionnaire asking specific company details.
• Invitation to Tender (ITT) – This is where your quality and cost ratio comes in.
• Request for Proposal (RFP) – This is similar to an ITT where cost and quality are assessed. The difference is that the client can’t or doesn’t want to define the scope of work upfront.
• Request for Quotation (RFQ) – This is similar to a tender but a lot smaller in size and scope.
• Framework – A framework agreement is an agreement between one or more businesses or organisations.
• Dynamic Purchasing System (DPS) – Similar to an electronic framework agreement. New suppliers can join at any time.

Now you know what a tender contract is but how can you win?

1. Choose the right tender to apply for

Choose a tender that matches the skills and experience of your business. It will be clear in your response that you are a suitable candidate for that contract. You should choose a tender that you meet the requirements for such as:

• Location
• Policies
• Pricing
• Contract value.

If you chose a tender that you aren’t suitable for, you will be unsuccessful with your bid. Many companies bid for contracts that are far from their abilities and experience which is a waste of time. Only bid for tenders you meet the requirements for and know you’re capable of being able to deliver.

2. Understand the specification

What is a tender contract? In order to understand this and before you apply for any tender opportunity, you should read the tender documents carefully. You need to understand what the buyer is looking for and whether you can deliver that. There is an opportunity to ask the buyer clarification questions if there is anything you are unsure of.

3. Give yourself enough time to do it

Preparation is key if you want to win your bid. Planning how you will manage your time will make the tender process less stressful and more successful. The tendering process is time-consuming so allow yourself plenty of time. There is a heavy workload when it comes to answering the questions as they are looking for detailed answers. It takes time to make sure you have all the supporting evidence and documents required. Even the submission of the bid can take up a lot of time. Especially if you need to upload a large number of files. Be sure to put plenty of time aside for the whole process as you don’t want to rush it.

4. Answer the question fully

 If a question is asking for a 500-word answer, one paragraph simply won’t do. The buyer is looking for an in-depth, detailed answer. If you answer the question in 100 words, you won’t win the bid.

If it’s a long question, we recommend breaking it down into multiple questions. This can help you understand the question better but also help construct a more detailed answer.

If the buyer has to read your response more than once, it isn’t concise and clear. You should keep your answer relevant to the question at hand. Make sure your answer meets the criteria for maximum marks. You should always use evidence in your answers. The more examples you use the better, as it shows the buyer you are capable of delivering the contract. Don’t forget to always back up what you’re saying.

5. Appropriate pricing

A full understanding of the pricing requirements of a tender is crucial. You should always ask questions if there’s anything you’re unsure of. The price you submit your tender with is usually non-negotiable should you win the tender. It’s important to get it right. The buyer will see it as unsustainable for contract delivery. Are your prices higher than most of your competitors? Trying to win a tender with a heavy price task is virtually impossible.

6. Demonstrate best value

Everyone wants the best value for money. It’s the same principle for public sector organisations tendering for work. Your response must demonstrate you are fully capable of providing the product or service the buyer is asking for. Some things to consider include:

• Are you providing a competitive price?
• Have you proved that you could exceed the key performance indicators (KPIs) requested?
• Have you included social value initiatives?

7. Understanding your competition

Another way to help win your bid is to understand your competition. What are their strengths and weaknesses? If you know they have a major weakness in a particular area, explain how strong you are in that area. If they have a major strength in one area, stress how your company is better or different.

Why should you be trying to win a tender?

You know the answer to ‘what’s tendering’ and ‘what is a tender contract. Let’s address why you should be winning them? Winning a tender contract poses many benefits to your business including:

• Guaranteed pay in the public sector

If you’ve been awarded a public sector contract, you’re guaranteed payment. Public sector bodies are legally required to pay the awarded supplier. The Crown Commercial Service (CCS) must pay suppliers within 60-days of invoicing. This is to comply with the Prompt Payment Code.

• Gain experience

In order to win large contracts, you must present relevant case studies and previous experience. You can build up your experience by tendering for contracts as part of framework agreements or dynamic purchasing systems (DPS). If you’re a first-time tenderer, we recommend starting with these.

• Make contacts

Following on from the above section, in order to gain experience and provide case studies you need to make contacts. Developing relationships can help you worth with more buyers and build up your experience. Contacts are a vital element to helping you expand and grow. The more you tender the more contacts you will begin to build up.

• Sustainability

Another advantage is the ability to secure long-term contracts. Whilst any length of a contract is great for your business, securing long-term ones poses more benefits. Running a business can be hard and remaining sustainable doesn’t come easy. We have helped clients to secure upwards of four years of income, from one win. To any business owner, this is an attractive prospect. Find more information and results shared by our previous clients on our testimonials page.

• The government wants to award SMEs

Don’t assume because you’re a small business that you will lose out to big organisations. In public sector tendering, the government have to spend their money fairly to ensure everyone has an equal opportunity. The UK government has a target to see at least £1 in £3 spent with Small Medium Enterprises (SME).

• Encourages competition

Competition isn’t necessarily a bad thing if it’s healthy. When tendering for contracts, you’ll be competing against other suppliers to win the bid. This means you know you need to perform your best if you want to win a contract.

• Build a reputation

It’s important to build up a good reputation for your business. The more contracts you win, the better your reputation will become in the industry you work in.

We hope this guide has answered your questions to ‘what’s tendering? And what is a tender contract?’. If you still need further help, our team are on hand to offer assistance.