What is a tender?
A tender is an offer to do work or supply goods at a fixed price. When government 'puts out a tender', this means government asks the public for price offers to do work or supply goods. Once the government accepts a tender, it is binding to both the government and the person or company who won the tender. Therefore, the person or company has to provide the goods or services in the manner agreed to and at the price offered; and the government must pay the agreed price at the agreed time.
What is the first step in the tender process?
The Sarah Baartman District Municipality requires businesses to register on the database of suppliers before it will consider using the business as a service provider. These company registration documents are available on the website (home page/download supplier database application) and from the municipal offices in Port Elizabeth. Once the business is listed on the database, it is ready to submit tenders to the municipality.
Where does a business find tender applications?
The Sarah Baartman District Municipality advertises tenders on the website and in local newspapers such as The Herald, Die Burger and community newspapers such as Grocott's Mail and the Kouga Express.
How does a business complete a tender?
- Each tender indicates where to obtain the tender documents and when and where the tenders need to be submitted.
- Tenders applications must be submitted in writing.
- The number of associated forms each tender requires must be submitted together with the tender. These forms may take a while to obtain and it is necessary to apply in advance for these. Do not leave the completion of the tender to the last minute.
- Once all forms have been completed and signed, place them in an envelope with the tender number and deliver it before the specified closing date. There is a very firm deadline - no late tenders will be accepted.
How are tenders awarded?
- After the closing date, all the tenders are checked for basic compliance to the tender regulations. Tenders can be disqualified during this process due to non-compliance.
- The compliance of the products or services offered in relation to the specifications and price is considered. All tenders which comply with the specifications are listed in order of price. Those in the lowest price tender list are in the lowest price group.
- Preference points given to those suppliers on the list of lowest price tenders are first verified. Preference points are only awarded after the most expensive tenders have been excluded, as this makes the process quicker and fairer.
- Those with verifiable information come out with the best preference points and are therefore awarded the contract.
Tips for tendering
- Provide all the information required.
- Calculations for tender prices need to be checked and correct.
- If unsure about the tender, enquire and obtain all relevant information.
- Do not make misinterpretations or false statements.
- Present the information in a neat, well organised manner.
Maximizing your tender points
The winner of a tender usually scores the highest number of points in the tender evaluation process. All tenders will state how these points are allocated but they are usually for the following:
- BEE status - the higher the number of previously disadvantaged people who own shares in the company submitting the tender, the more points are scored. Extra points are often awarded to youth, woman and disabled too.
- Location - most organizations requesting tenders would like to award tenders to businesses operating within the local region. Thus if the Sarah Baartman District Municipality is requesting a tender, a business based in the district or surrounding areas will earn more points than a business based elsewhere.
- Past experience - a significant portion of points allocated in a tender evaluation are for past experience. Businesses that have completed at least three or more tenders similar to the tender requested will score maximum points.
- Project management team - the team of people who will manage the tender need to have as much experience as possible. The tender will usually state the type of experience and qualifications required.
- Submission of examples - some tenders may ask that the samples of previous work, samples of goods or services or technical statistics of the goods or services must be submitted in the tender.
- Price - another big decider in who wins the tender will be the price quoted. The tender documents will usually give an exact example of what needs to be submitted so that, in the evaluation process, exactly the same items are compared.
To maximize the chance of winning the tender, each of these items needs to be evaluated individually and an effort must be made to score full points for each item.
There are a number of ways of maximizing these points and they include the following:
- Joint ventures - This is when two or more companies pool their resources to score maximum points. Thus a company that is entirely white owned that would score high points under past experience may want to create a joint venture with another company with less experience but with a high BEE status.
- Low pricing - companies that lack past experience may try to score high points by submitting a low price. This can be risky as, if the price is too low, the tendering company may not be able to pay their staff and suppliers.
- New staff - highly qualified staff may be contracted as part of the management team and thus increase points in this area.
The tender evaluation committee is not always obliged to award the tender to the organization with the highest score or lowest price offer. They may award the tender to an organization with which they feel most comfortable. Thus neatness of presentation can count for a lot. Make sure your tender is always accurate, easy to read and well presented.