10 Common Tendering Mistakes That Are Costing You Big Time
  • by Claris Zimbiti




10 Common Tendering Mistakes That Are Costing You Big Time

tendertube | 10 Common Tendering Mistakes  That Are Costing You Big Time

Do you know that one mistake can often mean the difference between a win and a loss?

Let’s face it, responding to government tenders is very expensive. And for you to give in to some of the common tendering mistakes might be a huge cost to your business.

Let's take a quick look at some of the costs that are involved. Some tender documents are sold and you have to purchase them. You have to travel to attend some mandatory pre-bid meetings and site visits.

At times, you might have to process a bid security from a commercial bank or bid bond from an insurance company. And maybe hire consultants to help you with preparing your bid. On top of that, you might have to either travel to physically submit the bid or you might use courier services.

All those costs are business expenses. They have to be accounted for. What about your time and energy? What about opportunity cost?

And the next thing you hear is your competitor was awarded the contract. You start wondering. What the heck happened to my bid?

In this post , I will show you 10 common tendering mistakes that can reduce your chances of winning the contract. And you won’t even know it because nobody will tell you - unless you ask. You simply want to avoid these mistakes because they can cost you a big time.

 

Table of Contents

 

  1.   An inside scoop at how evaluators look at your bid

  2. Stage 1:  Initial Review at Bid Opening

  3. Stage 2:   Preliminary Examination

  4. Stage 3:   Technical Evaluation

  5. Stage 4:   Financial Evaluation

  6.   The common tendering mistakes

  7. 1.   Late Bids- a day late and a dollar short

  8. 2.   Unsigned Bids

  9. 3.   Incomplete Bids/Missing Items

  10. 4.   Bid Security/ Bid Security Declaration Issues

  11. 5.   Failing to comply with minimum requirements

  12. 6.   Partial Quantities in case of goods

  13. 7.   Nonconformance to the required specifications

  14. 8.   Changing the required contract implementation schedule or delivery times

  15. 9.   Unacceptable price adjustments

  16. 10.   Conditional Bids

  17.   Conclusion

 

An inside scoop at how evaluators look at your bid

Before we dive in, it is important for you to understand how your clients evaluate your bid. Once you understand this, you will then be able to craft your bid based on the expectations of your clients.

Basically, your client goes through four stages when evaluating your bids

 

Stage 1: Initial Review at Bid Opening

What happens on this stage is that bids that are received on time are opened. Then they move on to the next stage. On the other hand, bids that are received late are rejected. They are returned to the bidder unopened.

 

Stage 2: Preliminary Examination

The second stage is for reviewing the formalities.

Procuring organizations always prefer dealing with bidders who are reputable, registered and operating legally. These include things like company registration documents, PRAZ registration, trade licences, NASSA contributions, insurance certificates, tax clearance certificates and so on. They also prefer bidders who are financially stable.

What really happens at this stage is that the bid evaluators do some verification checks. The purpose is to make sure that you are complying with the above regulations. They check whether your bid is signed. Also, they check whether the information you have provided is complete according to their requirements.

All the bids that do not comply with the minimum requirements are dropped. They are not considered for the next stage. Below are some of the expectations of the client that are expressed in the form of questions. Make sure that you address these questions.

 Tendertube | Questions being asked by the client

 

Stage 3: Technical Evaluation

This stage is for reviewing the technical specifications.

Bid evaluators check for these three things :

  • • Understanding and compliance with the technical specifications or scope of work

  • • Your work plan, implementation schedule, qualification and experience of key experts and quality management issues

  • • Your method statement or approach to execute the works or assignment,

All the bids that do not comply with the required technical specifications are dropped. Bids that fail to obtain the minimum pass mark are dropped as well. They are not considered for the next stage.

Below are some of the expectations of the client that are expressed in the form of questions. Make sure that you address these questions.

 Tendertube | Questions being asked by the client

 

Stage 4: Financial Evaluation

This stage is for reviewing your offered price.Below are some of the expectations of the client that are expressed in the form of questions. Make sure that you address these questions.

 Tendertube | Questions being asked by the client

 Tendertube | How your clients evaluate your bids

 

The common tendering mistakes

Now that you know how your clients evaluate your bids, let’s move on to discuss the tendering mistakes that are holding you back from winning the tenders you have always dreamt of winning.

 

1. Late Bids- Missing the deadline

It's better to be late than never doesn’t work in tendering.

If you are late then you have lost. And the worst thing is that your bids are not even opened after so much effort that you put in. They are returned to you as if nothing happened. There are no two ways about it. That’s the procedure.

What to do

  • • Always verify the submission date and time

  • • Be on the lookout for any amendments to the tender

  • • Make sure that you are familiar with the bid submission location and directions. If you are not familiar with the place, leave enough time for you to get to the place before the submission time.

 

2. Unsigned Bids- Failure to sign

There are some key areas that need to be signed in your bid. If you do not sign these then your bid will be thrown out. Watch out for these key areas.

 

a. The Bid Submission Form or Letter of Bid must have the full names and signature of the person signing and a date.

 

b. Power of Attorney.

The person signing the Bid Submission Form must have the legality to do so by way of a Power of Attorney usually with a notary seal. This is not a basic letter but a Board Resolution giving powers to the person to sign the bid, negotiate and sign the contract.

 

c. Bid validity

The bid validity period is the period within which a bidder agrees to keep their offer legally binding. The purpose is to make sure that bidders do not change their prices during that period. The validity of the bid is normally specified in the Bid Submission Form or Letter of Bid. Failure to specify your bid validity may lead to rejection. To add on to that, submitting a bid with a lesser validity period also leads to rejection.

 

d. Joint Venture Agreement

This is when two or more companies come together to submit a bid as a Consortium or Joint Venture. Make sure that you submit a Joint Venture Agreement or Letter of Intent to Form a Joint Venture signed by the respective parties together.

 

3. Incomplete Bids/Missing Items

A lot of times, many bidders take advantage of the fact that they have been doing business with that firm for a very very long time or they are well known in the industry. They assume that because they are known very well, all the odds are in their favour.

You have to know that whether you have done business with that client before or not, the evaluation committee can only select your firm based on the information you have provided in your bid. If you miss any section, then it means you get zero points.

What to do

• Check, check, and check again. If something is missing, unclear, incorrect, or ambiguous, raise a clarification.

• Do not take the bidding instructions for granted

• Do not just assume they know your capabilities even if you are the existing firm. Every bidding process is different regardless of what you may have done in the past

 

4. Bid Security/ Bid Security Declaration Issues

Bid Security is money that is held by a financial institution such as a bank on your behalf that can act as a monetary guarantee.

The main purpose of the bid security is to prevent bidders from withdrawing their bids before the end of the bid validity period or from refusing to sign the awarded contract. In the case that you decide to do so, you forfeit the bid security amount to the client.

Bid Security can be in the form of a Bid Bond from an insurance company or a Bank Guarantee from a bank. The Bid Security must be of the correct amount and if submitted by a joint venture should be in the name of all of the partners of the joint venture.

Here are some of the scenarios related to Bid Security that can lead to automatic rejection of your bid.

• Late submission of Bid Security

• Insufficient amount of Bid Security

• Using the wrong form of Bid Security

• No Bid Security at all

 

5. Failing to comply with minimum requirements

Clients usually specify the minimum statutory or commercial requirements that you must meet for you to be considered. These include PRAZ Registration, valid tax clearance certificate, company registration certificates etc. Failure to submit may cause rejection of your offer.

What to do

• Follow all the instructions given

• If there is a specified structure of format, follow it to the letter

 Tendertube | Common Tendering Mistakes

 

6. Partial Quantities in case of goods

Besides providing complete bids, there are some cases where bidders are allowed to propose partial bids. For example, when the tender notice only requests for part of the supplies or services required, then bidders are allowed to quote for only selected items or only partial quantities of a particular item. If partial bids are not specified in the bidding documents, then your bid has to be complete. Otherwise your bid is rejected.

 

7. Nonconformance to the required specifications

Failing to meet specifications by offering something different and inferior from what was asked for may lead to rejection. For instance, if the customer requests for 4X4 vehicles but your company offers 4x2 vehicles , the client will reject your bid. Therefore, it is important for bidders to comply with specifications requested by the client.

 

8. Changing the required contract implementation schedule or delivery times

Clients usually specify the expected delivery period or implementation schedule. Changing the contract start date or delivery period, or implementing something outside of required dates usually will lead to rejection of your offer.

 

9. Unacceptable price adjustments

The common practice of tendering is to offer fixed prices for the duration of the validity of the bid or proposal. Putting price adjustments clauses or adding other conditions for the pricing may lead to the rejection of your offer. However, this means that for the scope where you don't know how much work is involved, you need to guess what your profit margin will be and set that as your fixed price.

 

10. Conditional Bids

How does your offer become a conditional bid? This is when you express some exceptions, reservations or conditionalities on commercial issues. A good example might be taking exceptions to critical issues such as applicable law, taxes and duties, and dispute resolution procedures.

Another situation that can lead to a conditional bid is when you refuse to bear important responsibilities and liabilities allocated in the bidding documents. This may lead to rejection of your bid.

 

Conclusion

It is important to avoid these tendering mistakes because they can cost you big time not only financially but also in terms of your time and effort. Pay attention to detail. While avoiding these common tendering mistakes does not guarantee your winning contracts, they put you a few steps ahead.

What else can you add? Let me know in the comments below.