Historically, governments task NGOs and other public bodies to provide essential public services. NGOs were assigned projects based on the awarding of grants or contracts. However, times are changing. Governments don’t like to spend a lot of money on services, so instead of directly conscripting NGOs, they’ll put out “tenders.” NGOs put out tenders of their own, as well, when they need a service they can’t do themselves. What is tendering? How does the process work?
Tendering: a definition
Tendering is when an organization (like the government) invites other groups (like NGOs) to submit a bid to provide a specific service or product. To start the process, the organization seeking services will prepare “tender request documents.” These are also known as “invitations to tender” or “Requests for Proposals.” These documents outline what the procurer needs, their criteria, requirements, and any other instructions. The specific rules can vary slightly depending on the country.
Organizations interested in providing the services use these documents to develop their proposal. They explain why they are the best choice for the project, convincing the procurer that they’re offering the best value for the money.
The tender process
The tendering process can be complicated and requires managers with specialized skills. Staying organized and on task is critical to success. The team in charge of putting out the tender needs to understand the commission (or procurement) process.
The first step is to identify the organizations that best fit what the project entails. Managers should consider whether to keep the tender open (which can encourage bids with low prices) or restricted. Restricted means that only organizations that meet certain criteria, such as government registration or pre-qualified, can bid. Will the tender extend international or stay local? Will the tender go to one organization or will it be split? There are legal considerations that must be respected, as well.
How do organizations win bids?
What about on the bidder side? What do they need to do to successfully win a tender? Knowing how to write a tender bid is essential. Larger organizations will even have people who specialize in these documents. If the organization is small and less experienced, a commitment to research and learning is very important. The more detailed the proposal, the better. In his book, 21st Century Skills for Non-Profit Managers: A Practical Guide on Leadership and Management, Don Macdonald explores what NGOs need to consider when bidding on tenders. This process can apply to any organization in the bidder position. The proposal should be dedicated to the following:
- Showing that the organization can deliver quality work
This includes the organization’s track record and successes, the experience and credentials of the staff, and quality-check systems. The bid also needs to describe
organization’s policies. Why? The potential client needs to make sure that any organization they work with is above board. The tender bid should also include a risk management plan.
- Showing that the organization will have a positive impact on society
Organizations that put out tenders aren’t just looking for the lowest bid. They wantto award the tender to a bidder that demonstrates why they’ll add value to society. This is different than showing how much bang the organization will get for their buck; it’s showing how the “bang” will benefit society in some way. In the proposal, the bidder should explain how the societal benefit will be measured and provide examples of how their services have helped society in the past.
- Showing that the organization knows the area the project will be based in
Every area has a specific context that dictates their needs and how those needs should be met. The tender bidder needs to show that they understand the context. This is especially important if the organization is not local and coming in from the outside. In-depth research is a must. The organization should elaborate on the specific needs of the area, showing they’ve done their research, and tailor ideas to the context.
What about the cost?
The organization putting out the tender wants to spend the least amount of money possible for the best services. It’s the responsibility of the bidder to calculate what that cost should be, so they don’t end up losing money. Small organizations have a trickier time with this. Larger contracts are often out of reach. An organization should not spend time trying to obtain a tender that’s too large. The quality of their services will suffer and their reputation will be damaged.
Finding the balance
Tendering is a challenging process for both the organization procuring the service and the bidders. It’s important to master, however, because it’s becoming more common. Governments, private companies, and even NGOs will put out tenders for all kinds of services and products. They open up a competitive field where they can obtain what they need for the best price. It’s a balance because the bidder offering the lowest price may not provide everything the organization wants. For the process to work out well for everyone, both sides must be organized, educated, transparent, and unbiased.