How to get your business tender ready
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Definition

Welcome to the “Bidding in Namibia” online course. In this course, a basic understanding of what bidding is and why companies or government agencies request for bids will be an added advantage but the course is designed with a new market entrant in mind. So don’t worry if you have never done any bidding in the past.


You will also realize the interchangeable use of the words “tender” and “bid”, “tendering” and “bidding” or “bidders” and “tenderers”. So if you come across any of the words listed above, they are meant to mean the same thing.


Until recently Namibian companies and government agencies used the term “tender”, “tendering” or “tenderer” until the introduction of the new Procurement act 15 of 2015 this word has been replaced with “bid”, “bidding” or “bidders”. Whether “tender” or “bid” is used depends on company to company, but for the sake of progress, “bidding” will be the preferred term in this course. However, be mindful that the term that holds popularity amongst the general public is “tender” or “tendering”.


Now before we begin we need to understand what bidding is and why companies or government agencies use bidding as a means of procurement.
To understand what bidding is we are going to list and dissect 3 definitions

Definition 1: Bidding is a form of solicitation (invitation) that is used in the procurement (buying) of goods and services. It is used by companies and government agencies that require the delivery of products or services on a large-scale basis. The agency or company must issue a form of solicitation(usually via newspapers), commonly referred to as a Request for Proposal (RFP), which details the products or services that they require vendors(suppliers/bidders) to show interest in supplying through a competitive process.

Definition 2: When an organization wants service from another organization, it creates an open Request For Proposal with the details of the expected services and invites bids on it. Organizations that are interested to offer their services bids on the projects with their cost, deadline of the project, and other details. After receiving sufficient bids after the due date, the organization which is asking for the services decides whom to allocate the project based on their multiple criteria.

Definition 3: It is the process of selecting suitable suppliers to fulfill projects or to acquire goods;


To understand the definitions above we need to further explore the difference between bidding, bid, and bidders:


Bidding refers to the process undertaken by a company or government agency when they invite, receive and evaluate proposals/quotations for the supply or provision of products and services equally a company submitting a proposal for the invitation is bidding
A Bid: Is a response from a supplier, contractor or service provider to a solicitation request that, if recommended for award, would bind the supplier, contractor or service provider to perform in accordance with the contract.
Bidder: Is the company that submits a bid to a buyer to offer or declare their willingness and ability to provide a product or service at a particular cost or conditions.

Summary:
To summarize and simplify the above definitions we can refer to bidding as the process that companies undertake in the procurement of goods and services in order to select the ideal supplier for that particular product/service.
The set of documents consisting of the conditions and price submitted by the supplier to the buyer in response to a bid invitation is referred to as the bid and the bidder is the company or individual who expresses their interest to supply goods or render a service by submitting a bid to the buyer.

Buyer: the Company, institution or organization that requests for the submission of bids for the supply of goods or rendering of services
Supplier/bidder: The company/individual that submits a proposal to supply goods or render services at a price.

I trust that we are on board with what bidding is, now let’s look at why companies engage in the bidding process. We look at it from the buyer’s point of view and subsequently from the supplier/bidder’s point of view.

Buyer’s Viewpoint on Competitive Bidding

Identifying the most qualified vendor
From the buyer’s side, competitive bidding serves to identify the most qualified vendors of particular goods and services. The buyer or recipient of bids must prepare a complete RFP and publish it, so that it reaches qualified vendors. Ideally, when bidding for the order, vendors must show their ability to execute the order by detailing their history of achievements, the cost of delivering the products or services, and the timelines of making deliveries.
For specialized services such as the purchase and installation of a dialysis machine in a hospital, the buyer would want to award the tender to a vendor who is specialized in the field and who has already made similar installations in other hospitals.

Seller’s Viewpoint on Competitive Bidding

Seller’s bidding process
The seller’s responsibility is to send proposals in response to an RFP and convince the buyer that they are the right people for the job. The typical bidding process for a seller is as follows: getting qualified to send proposals; reviewing the terms of the RFP and determining if they are qualified; creating and sending a proposal that satisfies the requirements of the RFP; and getting a response as to whether they won or lost the bidding.
One of the critical factors that determine if the seller will be awarded the job or not is cost estimation. The seller must do adequate market research to ensure that the price they quote corresponds to the market rate. In addition, they must understand the requirements of the RFP and seek clarifications on areas where they are uncertain. Failure to comply with the terms often results in disqualification during the selection process.

Seller’s considerations in a bidding process
There are several things that sellers consider when responding to the RFP. First, the seller must understand the buyer’s needs by knowing what exactly they want, and use that as a basis for pricing the proposal. Even though buyers tend to consider the low-priced bids, sometimes the buyer may consider a high-priced bid if it is unique, the seller’s qualifications are unusual, or the seller guarantees a seamless delivery of goods.
On the other hand, a seller may decline to respond to a proposal if, according to their knowledge and previous engagement with the client, they face low chances of winning in a competitive bidding process. It may be because of inadequate experience, inability to meet the terms of the proposal, or that the buyer expects a bid that the seller considers too low.

Benefits of Competitive Bidding
Competitive bidding offers several advantages to both the buyer and the seller, as outlined below:

To the buyer
Competitive bidding helps the buyers get the best price and contract terms for their proposals. It allows them to get the most qualified sellers of products and services while keeping costs low. They also get to work with sellers with a history of achievements and that are qualified to deliver specialized services.

To the seller
Competitive bidding allows sellers to execute proposals they are familiar with and at a rate that they determine. It allows them to save on costs that they could’ve used to find potential buyers for their products or services.
By the end of this unit you should be able to understand the following:
Bidding between bidding, a bid and a bidder
Difference between a buyer and supplier/bidder
Why companies, institutions and government agencies engage in competitive bidding
The benefits of biding to the buyer and to the seller/supplier/bidder

Take the next quiz to determine your understanding of the topic before you proceed to the next topic.