What is a tender?
A business tender is an offer to do work or supply goods at a fixed price. The tender or bid process is designed to ensure that the work to be done is given out in a fair way. There are
a number of policies (known as 'procurement policies') which are used as guides on how to make decisions on which tender to accept. Although price is very important in the decision on which
tender or bid to accept, it is not the only factor taken into account.
Once the client entity accepts a tender, it is binding on both parties. This means that the person or company that won this business opportunity has to provide the goods or services in
the manner agreed to and at the price offered, and the client entity must pay the agreed price at the agreed time. In other words, once accepted, a tender is a binding business contract.
Even if you don't win the work this time, writing a tender can clarify your aims, strengths and weaknesses and you can learn for next time by asking for feedback on your bid. It raises
your profile with the client and helps you learn about the clients needs.
Tenders in South Africa are a lucrative source of income for small business, but can be challenging to negotiate, particularly since legislation
has changed, and requirements differ between organisations and government sectors. Getting the process right not only saves time and effort but has the potential to set up lucrative income
How do you find tenders?
You can identify public-sector contracts by:
- Following up contract notices published in newspapers and trade magazines;
- Getting the government tender bulletin;
- Searching department websites;
Or alternatively, one can access the Online Tenders website at a nominal monthly subscription cost to get the latest tenders and business leads in SA.
Online Tenders is a tender notification service that researches business tenders in South Africa
and business leads throughout the country, classifies and matches the tender that is relevant to your exact business requirement. These tenders are then emailed to you on a daily basis
or you can simply access the Online Tenders website for further tender information.
Should you bid for a contract
Preparing business tenders can help you to win big orders, but it can also be time-consuming, cost money and takes up valuable resources. If
you don't get the contract, the money and time spent is usually lost, so you need to weigh up whether or not a tender is worth bidding for.
Key points to consider
- Get hold of the bid documents and analyse them.
- Make sure you can match the technical, skill and experience requirements.
- How much will it cost to prepare your bid?
- Would the work fit in with your strategy and positioning of your business?
- Estimate the costs of fulfilling the contract and whether or not you'd make enough money to justify it.
- Assess how the contract would affect your other work, staffing and ability to take on other new business opportunities.
You also need to consider how important the client is to your business contracts. Is this a good potential client or one you don't want to offend by not tendering? Try to understand things
from the client's point of view.
Collection of tender documentation
Check the tender advert and phone the contact person. Clarify issues on how the tender document can be collected. Most of the time, this is stated on the tender advert.
Finding out what the client really wants
Many potential clients will talk things through on an informal basis before you decide to bid. Ask for a face to face meeting or a telephone chat. You should always raise questions by phone
or email if business tender documents are unclear - on anything from deadlines to how you will get paid.
Make sure the client is serious and that you're not there to make up the numbers or to test the market. Sometimes customers may just be fishing for ideas they'll then use for themselves.
But don't forget many clients genuinely want you to make a creative contribution and provide relevant ideas.
Site inspections are another way in which clients disseminate information on the project. Some site meetings are compulsory and not attending the meeting will automatically disqualify you
Therefore, check the tender advert as soon as it is released to clarify the site inspections by telephoning the client and requesting confirmation of the site inspection. This is one of
the reasons for subscribing to a South African business tender notification service; you can now have your tender adverts delivered to your office desk daily.
What to put in your tender
So, we have collected the document and we have decided that we want to tender. What do we put in our tender submission?
- Focus on the client - talk about their needs and how you can solve their problems. When you write about yourself, it's to prove you have the skills, experience and the organization to fulfill
the client's requirements.
- Help the client by coming up with ideas - from alternative ways of doing things to how to tackle possible worries about future maintenance and staffing implications.
- If the client has provided a qualification document, make sure that you cover everything in the document.
- Value for money decides most bids, not simply the cost. Bring something to the work that can't be done by the client. Emphasise business benefits, service improvements, risk reduction,
low maintenance, quality, reliability, previous satisfied customers plus lifetime costs and so on.
- Analyze all the cost and pricing factors of the contract. Don't ignore fixed costs such as wages for staff who could be working on something else.
- Contract management - show you have the resources to do the work in a cost-effective way to meet the client's needs, hit deadlines and respond flexibly to changing situations.
- Show you've thought about and can manage potential financial, commercial, and legal risks that could cause contract failure.
- Give details of your team. Emphasize strengths - CVs should highlight successes with similar projects as well as qualifications and experience.
Compiling your tender submission
Now that we know what to put in the document, we must compile our submission. Each tender indicates a closing date. This is a very firm deadline and no late business tenders can be accepted.
Bids or business tenders in South Africa have to be in writing. Each tender has a number of associated forms, which must accompany the tender you submit. The specific forms you require
for your tender should be listed in the tender documentation. You should consider very carefully how you fill in these forms. Get advice if you are unsure of anything.
The forms usually required for national and provincial business tenders in South Africa are the following:
- The Bid
In this document you agree to be bound by the terms and conditions of the tender or bid.
- Tax Clearance Requirement
Your taxes must be in order to be successful with your tender or bid. This document has an 'Application for tax clearance certificate' form attached to it. You have to complete this form
and hand it in at your nearest South African Revenue Services (SARS) office, to get a tax clearance certificate. You must then attach the original tax clearance certificate that you get
from SARS, to the tender or bid documents. This certificate serves as proof that you are not in arrears with your tax payments.
- Price and motivation
Which of these documents you complete depends on the subject of the tender. In this form, you motivate your price, by describing the product you will supply or the experience of the person
who will perform the service. This form is often amended for the particular tender, so carefully check which one you need to complete.
- Declaration of Interest
This is the document in which you declare whether or not you have a relationship (friend, family, business leads) with anyone who works for government. This is so that those people are
not involved in awarding the tender in any way, to avoid corruption.
- Preference certificate
You must fill in the form for tenders even if you are not claiming any of the preference points.
- Contact form
This is the contract that binds the parties should the tender be successful. There are different forms for different contracts.
There may be other forms to fill in for a specific tender or bid. These should be included with the tender or bid documents that you receive.
Writing your tender
Make sure that you match the bid specification and answer all questions. Summarise your bid and explain why it answers the client's needs. Write this last, yet include it at the beginning
of your tender.
Clients will also expect you to:
- State the purpose and origin of the bid
- Summarise your work as a contractor, past experience and credentials for this job
- Say how you'll carry out the work, and how and when the client's aims will be achieved
- Explain the benefits and value for money of your bid
- Detail when and how goods and services are to be delivered, and provide a timetable
- Demonstrate your team's skills, experience of similar work and their responsibilities if you win the contract
- Explain how you will manage the project
- Give details of your pricing and any aftercare arrangements within the price
- Be practical and identify potential problems without promising what's clearly impossible for you to deliver
Include a covering letter that responds to the bid invitation, summarises your main message. Additionally, explain how the documents are organised.
Delivering your tender
Once you have all the forms completed and signed, place your tender in an envelope with the tender number on it and deliver it before the closing time. You should deliver it to the place
specified when the tender was advertised.
At the delivery point, tenders are opened and respondents are allowed to join the tender opening process. All business tenders in South Africa are opened in public where the name of the
company is announced with the tender prices and associated costs.
Follow-Up your submission
After tender submission, it is always nice to follow-up the submission by phoning the client and querying the status of the adjudication process. It helps to be nice to the person on the
other end and to indicate that should they need any further clarity to please contact you. This also shows to them your commitment and eagerness to win this tender.
You maybe requested to perform a presentation to the client. Therefore your acceptance is vital. Prepare yourself well, know your response in and out and speak confidently @ the presentation.
You need to prove to your client that you have the skills and capacity to deliver the project as per your tender response.
Also the client may require further clarity @ this meeting, so there may be questions asked. Prepare well and answer questions to the best of your ability.
After the adjudication process, the client will award the project to either a single company or a consortium of enterprises or may even not award the tender. If you are awarded the tender,
you need to respond to the client by confirming your letter of appointment. Part of this process will entail setting up a kick-off meeting with the client. Be proactive, take charge and
show your client that you know what you are doing and you are committed to deliver a quality project on time and within budget.
If you are not awarded the project, you can query the reasons why you were not selected. This always helps for future tenders. It is important to remember that you will not win every tender
that you respond to, as experts in the field of submitting business tenders in South Africa indicate that for every twenty tenders submitted you may only win a single tender.
Tips for tendering
The following are common mistakes made when tendering:
- Always provide all of the information requested by in the tender application. Do not forget things like your tax clearance certificate and shareholding certificates. Note: out-dated tax
clearance certificates are also not allowed.
- It is important that the calculations of tender prices is correct. Check and DOUBLE-CHECK this!
- Often, those working on a business tender in South Africa misinterpret the scope of the work. If you are unsure of anything in the tender, be sure to ask.
- Always sign your bid document. Unsigned documents are unresponsive and will therefore be disqualified.
- If you are an HDI, remember to claim your points. Points unclaimed are points lost!
- Make sure that you drop the tender into the right box, before the closing time. By law, no late bids will be accepted, not even 1 second past the closing time.
- If samples are requested, sufficient amounts must be supplied to enable the item to be evaluated under the appropriate technical or clinical conditions. Ensure that any requirements related
to compliance with SABS specifications are met.
Tips from the procurement officials:
- Always read through the bid documents carefully.
- Complete the document in full.
- Do a proper cost analysis when calculating your bid prices. Bids calculated too high or too low are considered unresponsive.
- Enquire about the bid and obtain all the relevant information before completing the tender document.
- Feel free to ask why you were unsuccessful so that you may learn from mistakes made.
- Make sure that you are able to meet all the requirements within the specified time and are able to honour your offer in the event that your bid is successful.
- Do not make any misrepresentations or false statements in your bid documentation. It is a legal document and therefore enforceable by law.
- Quality services and products will improve your track record and good standing with the department. Poor delivery creates a negative impression not only for your business contacts but for
all small businesses in general.