INVITATION TO TENDER (ITT) THE BASICS business analysis

1 June 2020

If your company succeeds in being shortlisted, you will be sent an Invitation to Tender (ITT). In my previous post I discussed the Pre-Qualification Questionnaire – this document looks at your past. The ITT looks to your future and what you can offer should you win the contract.

It can’t be stressed enough, whilst one eye should be on winning the contract, the other should be turned towards your competitors. To secure a contract you will have to show something different from the rest of the field. To use a horse racing analogy, you must turn your competitors into also-rans by identifying key differentiators which will help you to secure the contract.

I’ve received a tender invitation letter, what next?

Always ensure you read and understand the requirements laid out. It will contain information such as:

  • Who the customer is
  • Their address
  • A brief overview of their requirements
  • Short instructions
  • Points of note

More often than not, it will contain a number of additional documents, photographs, and any other information the customer deems necessary to the tender. Depending on your sector these might include site plans, consumables lists, or terms and conditions. This is not a definitive list and will be determined by your industry sector.

You should take particular note of submission deadlines and method of delivery. You’ll kick yourself if you’ve put together an amazing bid only to realise you’ve either missed the deadline or sent it via Royal Mail ‘Special Delivery’ when you should have submitted it via e-portal.

Pay particular attention to any pre-requisites such as insurance, experience or turnover levels; and any prominent contractual considerations like the presence of TUPE or pension schemes.

Failure to meet the criteria or misunderstanding the submission process will likely result in your submission being disregarded. So, pay attention to the key details; read everything thoroughly. Give them what they want, in the order they want it.

What is eProcurement?

This means the procurement process — from notice to contract management — is conducted electronically. This system is used by many public sector organization’s to purchase goods and services, publish notices and manage tender exercises. It can involve using specialist software systems.

When the law changed in 2018, all public sector organisations moved to electronic procurement for every aspect of the procurement process. This includes information exchanged during the tender phase (for contracts above the EU threshold), including the submission of tenders.

The benefits of the electronic method are that it removes manual processes, speeds up response times and has an environmental benefit by reducing the volume of paper generated.

Pricing

To ensure that your company’s pricing strategy is competitive in your industry sector, you must consider three essential pricing elements:

  1. Direct Costs are costs incurred to provide the product or service, e.g. staff, materials, subcontractors.
  2. Indirect Costs – include premises, management, professional fees, administration, etc.
  3. Profit – is the difference between the selling price and (1) and (2)

Always keep in mind, this is a fixed, non-negotiable price offer — a quotation not an estimate — which cannot be changed once accepted. Of course, there are always exceptions that prove the rule, and some types of tender allow negotiation. But these are not common, and it is rare to be given a chance to change your tendered price. Failure to correctly complete the ITTs pricing schedule is one of the most common tendering mistakes. You should always seek help or clarification if you are struggling, to avoid making fundamental errors that could cost you your bid.

MEAT – Tender Evaluation

MEAT stands for Most Economically Advantageous Tender, meaning that a tender is scored by a combination of price and quality. Apart from the lowest value purchases, all UK public sector tenders use MEAT.  Looking for specific weighting within the provided evaluation matrix will guide you when pricing tender bids.

A Winning Tender

When bid and tender writing, your ultimate goal is to persuade the customer to buy your product or service. Think about why you are writing the bid and what the reader wants to see to make them read on. You must give them a reason to be interested in your bid because it will be evaluated based upon the information you have provided. Don’t give them a reason to de-select you. Grab their interest; hold it by telling them how good your company is, and you will increase your chance of success.

In the fourth in a series of articles surrounding the tendering process we look into the next stages on the path towards securing a successful bid.