Open
tendering is often the preferred competitive procedure for purchasing goods,
services or works, the fundamental requirements of which are that tenders
should:
- Be open to all qualified and interested suppliers.
- Have objective qualification criteria.
- Specify neutral and precise technical specifications.
- Be advertised by a means that is open to all.
- Engender a clear and accurate evaluation criterion.
- Only be awarded to the most cost-advantageous bid.
The Tender must be fair, open, and transparent. The method used to select the winning supplier must be objective and allow for selecting the most commercially advantageous solution based on a price/quality criterion that is easy to understand.
The price/quality criteria can be based on a ratio that utilises the element of price or quality as the determinant factor, where the market is driven by price. This element will be a significant part of the buying decision process.
In contrast, where quality is of more importance, a prequalified list of the essential attributes of the purchase should be drawn up, to formalise a baseline upon which the buying decision will be based, within which price will be the minor determinant factor.
A genuinely open tender process fosters the most effective competition and adds the greatest value for money. However, there are arguments to the contrary that the open tendering process is overly complex as it is strictly procedurally based and is designed primarily for the procurement of simple purchases that are straightforward to describe.
As a result, the open tender process is unsuitable for complex procurements where the focus is more on the output and outcome of the purchase, rather than the strict adherence to standards. The disadvantages of open tendering are:
- An extended timeframe for the completion of the process.
- It requires strict adherence to administrative procedures.
- The capacity for the creation of clear and precise specifications.
- Suppliers are restricted in determining the technical requirements.
- It limits the building of long-term Supplier relationships.
- It tends to focus only on the least-cost solution.
- Formalisation could limit supplier participation.
Open tendering is a procedure that allows an organisation to submit a requirement for goods, works or services to an open market, offering an equal opportunity, without any buyer or organisational bias, to any supplier to submit a bid to supply the goods, works or services.
The
benefit of using open tendering to negotiate prices is that it introduces the
highest degree of price competition within the open market, which is the most
significant technological advancement innovator.
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