What is competitive tendering? It is a procurement method used by private sector organizations and government agencies that require suppliers to compete for work using formal and detailed quotations. The intention is that the purchaser (in the case of public service contracts the taxpayer) will get the best value-for-money.
However, many procurement experts have claimed that the process of competitive tendering is not desirable in the long term because it can reduce the possibility of developing good relationships between suppliers and the customer. Additionally, it also tends to discourage new entrants into the market that can discourage good vendors and service providers from competing for work.
Taking a closer look at some of the leading reasons why competitive tendering can fail:
An extremely slow process
It can take many months to go through the expression of interest and tendering process and then the assessment to get a successful bidder. This may lead to the customer waiting for a long period of time to arrange a contract for a product or service that then needs a fast project turn-around.
A barrier between suppliers and customers
Competitive tendering discourages open communication between suppliers and customers. Without deep dialogue between parties sometimes negotiated and innovative solutions are not developed.
Poor tender writing services
Whether you are referring to etendering in NSW or elsewhere, poor tender writing can lead to poor tender responses.
Without having access to professional tender writing services or understanding the need some of the best suppliers will not tender giving the purchaser a restricted choice of bids from a limited number of suppliers. The outcome of this may be that the purchaser may not get the best product or service on the market.
The use of poor quality and cheaper materials
The competitive tendering process may force suppliers to keep costs down in order to win the work. When costs are lowered there are risks of lower quality work which creates higher costs in maintenance, operations or higher life-cycle costs.
Reduced safety of workers and stakeholders
Meeting safety standards is another aspect that suppliers may skimp to lower costs. By cutting corners on safety there is an increase in project risk.
Competitive tendering should aim not to discourage mutually beneficial and long-term relationships with trusted suppliers. To escape the pitfalls of competitive tendering organizations should consider engaging qualified and experienced tender writers to help focus tenderers on the value of trust, long-term relationships and collaboration. If you require this kind of help call Madrigal Communication and we will help you navigate the pitfalls.