Tendering can be a lengthy and detailed process but it has the potential to lead to new and valuable contracts with key organisations. Ganesh Selvarajah, adviser at Business Link, explains how to get to grips with the tender process and get real results
Most businesses that supply goods or services to other businesses or to the public sector will be familiar with the tendering process. At its most basic, tendering means quoting for a job or writing to say why you should be given the business.
Bigger jobs or ongoing supply contracts will require formal tenders and work in the public sector is distributed through specific processes.
For many businesses, there is value in the tendering process itself, regardless of the outcome. Writing a tender can help clarify your aims, strengths and weaknesses, while feedback can provide clues for finding success next time. Tendering will raise your profile with a client and help you learn more about their needs. However, although preparing a bid can help you win big orders, the process itself is often time consuming and will eat up resources that aren’t recoverable if you lose out.
Preparing to tender
Get hold of tender documents at an early stage and analyse them to see whether you can match the potential client’s requirements for technical skill and experience. Work out not only how much the preparation process will cost but also whether, should you win, you have the resources to deliver the work. Establish also whether you will make enough money fulfilling the contract.
Check whether the work fits with the business’s strategy and positioning in the market and how it would affect existing work commitments, staffing and ability to take on other business. If putting in a bid still looks attractive, place yourself in the potential client’s shoes. Try to arrange a meeting with them to find out more about what they want, and don’t be afraid to raise questions – even obvious ones – by phone or email. It’s important to ensure a client is serious and not just testing the market or fishing for ideas.
For some businesses, winning a big contract will bring a step change in terms of workflow, and this will generate its own challenges. In particular, there are significant implications for cash flow, particularly for manufacturers, since payment isn’t made until delivery of the work. Service providers may need to budget for contracting in new staff. Such growth needs to be calculated, risk assessed and managed as part of the decision making about whether or not to tender.
Look at the timeline and check again whether you have the resources to submit a tender in time. Assess the cost in lost opportunities: are there any other, more profitable, areas of business you could explore? Finally, do you have in-house expertise, or will you need to bring in someone to write the bid for you?
Government contracts
The public sector employs more than a quarter of the UK’s workforce and is constantly on the lookout for new suppliers. Public sector clients can be attractive: they are under obligation to deal with suppliers in a fair, honest and professional manner (they must, for example, settle bills within 30 days of receipt), and tend to be longstanding and stable.
With the value-for-money drive towards helping small and medium-sized businesses (SMEs), around 15 per cent of businesses that win EU contracts have fewer than 10 employees, and while many high-value government contracts do go to large companies, SMEs can subcontract, consult or form consortia.
Tender information sites
• Business Link www.businesslink.gov.uk
• CompeteFor www.competefor.com
• Tenders Electronic Daily http://ted.europa.eu
• The Enterprise Europe Network www.enterprise-europe-network.ec.europa.eu
• Euro Info Centres www.euro-info.org.uk
• UK Trade & Investment www.uktradeinvest.gov.uk
• Supply2Gov www.supply2.gov.uk
Meeting the requirements
Businesses wishing to tender for public sector work must demonstrate a high standard of governance; conforming to purchasing policy in areas including equality, health and safety, environmental impact and diversity. Public sector and government contracts are sometimes advertised through newspapers and trade magazines. Some government departments have “selling to” pages on their websites, while the CompeteFor website (www.competefor.com) offers businesses the chance to bid for 2012-related contracts. Many public sector organisations also maintain and review lists of potential suppliers.
Government departments and their agencies must advertise higher-value contracts in the Official Journal of the European Union, which can be viewed through its linked website Tenders Electronic Daily (TED). The Enterprise Europe Network website gives links to regional network partners; Euro Info Centres provide information and contacts; while UK Trade & Investment offers daily sales leads on non-EU public sector opportunities.
A public profile
For any business with a product or service it wants to offer the public sector, Supply 2 Gov (www.supply2.gov.uk) is a good place to start. The government created this online portal in 2006 to give SMEs access to lower-value UK government contract opportunities (typically worth less than £100,000) and to provide public sector buyers with the ability to identify a wider range of potential suppliers more easily. With the market currently worth around £175 billion, the site has so far made visible more than 100,000 such opportunities – about 3500 every month.
Once registered, small businesses can search free for local and business-specific opportunities, and sign up for a daily alert facility. For a small subscription, businesses can also access national and regional contracts. Each contract notice contains a work description, the date it appeared, the closing date for bids, details of the buyer, a reference number, the value of the contract and contact details.
You can create a profile of your business and put it on the supplier information database, promoting your business directly to thousands of buyers. If you see an opportunity of interest and are writing your first tender, it may be worth putting together a test bid (if you have the resources) and soliciting feedback from a specialist bid-writer to see whether the bid is robust enough to put forward. The Business Link supplier matching service can provide you with details of local bid-writers.
As with tendering in the private sector, each stage of the procedure involves specific issues. These are explained in more detail in a guide to tendering for public contracts, which can be downloaded from the Department for Business, Innovation and Skills through the Business Link website www.businesslink.gov.uk. However, before embarking on any tender, ascertain whether the work you are bidding for is part of your core business. Make sure you read the documentation very carefully before spending any resources on putting a bid together.
Special procedures
When you have identified a potential contract and decided to tender, you need to know how you will manage the process. Who will gather information, research and coordinate the necessary material; draft the bid; check it; and cover gaps in workloads? Draw up a checklist to identify every document necessary to accomplish the process, and tick off the documents as you put them together.
Make a list of all the questions you might ask if another company was tendering to provide a service to you. Think about the material the tender must contain. It will need to state the purpose and origin of the bid and summarise your work as a contractor, together with outlining past experience and credentials.
The tender should also show when and how goods and services will be delivered; how you will manage the project; and details of your pricing and aftercare arrangements.
Caring for the client
In writing your tender document, it’s essential to focus on the client. Talk about how you will meet the client’s needs and solve their problems, and only mention your own skills, experience and credentials as they pertain to this. Describe how you can help the client to do things better and how you can work cost-effectively, hit deadlines and respond flexibly to changing situations.
Build trust by showing you are aware of potential financial, commercial and legal risks that could cause the contract to fail; and give details of your team and its strengths, including tailored biographies that show successes with similar projects. Lastly, focus on value for money: if you can bring something to the work that can’t be offered by competitors – benefits, improvements or credentials – this may help you to win the contract.
The final touches
It’s crucial to make sure that you match the bid specification and answer every question raised. If the client provides a qualification document, make sure that you cover all the points. Consider whether you need to protect information, through a non-disclosure agreement, for instance. Once your bid is complete, summarise in a paragraph how it will answer the client’s needs. Put this at the beginning of your tender.
Next, write a covering letter that responds to the bid invitation, summarises your main message and explains how the documents are organised. Don’t forget to indicate whether any information is commercially confidential.
In terms of presentation, use bullet points, headings, and sentences that are short and businesslike. Number your paragraphs, and keep everything consistent, from a regular-size font to CV format. Watch that you don’t introduce changes when cutting and pasting. Include appendices (if necessary), a contents page, and a smart front cover with project title, date, client name, and your business name. Then get a fresh pair of eyes to check for errors and assess the strength of your argument. And after all that effort, be absolutely sure that you deliver your tender on time, either by hand or by courier.