Tenders can be a rich source of extra sales opportunities for your company. How many tenders are available ? On average the UK public sector issues over 70,000 tenders every year with a combined value of £220 Billion.
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The bidding process in procurement these days is a straightforward process with a high rate of success for companies that follow the good practises we outline below. Bid documents are simpler, buyers respond to tender-queries, and the whole tender-process is transparent with bid-scores given and buyer feedback available.
Choose your tenders carefully
Pick only those that you have a realistic chance of winning
Why ? Because it’s the easiest way of avoiding unnecessary costs, keeping your current customers, minimising risks, and raising your profitability. If your business is not able to fulfil the contract properly, that will become evident from your tender, and you will have wasted the time and money you spent in bidding.
So, how do you choose which tenders to go for, and which to walk away from ? Here’s a brief list of the main things to watch out for:-
- The contract should not be too big for your finances and should ideally be less than 25% of your turnover, so that you don’t end up over- trading. Yes, a big contract might be tempting, but if it’s too big for your company at the moment, the best course of wisdom is to walk away.
- Ensure that the size of the bidding process in procurement will not conflict with serving your existing customers. If the new work takes resources away from the service you currently provide for them, they won’t like the consequent reduction in your quality of service, and they might leave you for a competitor. By avoiding such resource conflicts, you maintain your long-term customer base.
- You should have all the formal accreditations stipulated in the tender. If you don’t, you won’t make it through the Pre Qualification Questionnaire (PQQ) stage.
If you are keen on a particular tender opportunity, it can be hard to acknowledge a shortfall in any of the above areas, and walk away. But by recognising and accepting the limitations of your current business, you will avoid wasting your time and money on producing unsuccessful bids.
It’s easier to bid now
The bidding process in procurement is much simpler these days to encourage more participation from SMEs. Recent changes include
- Pre Qualification Questionnaires (PQQs) often need only be completed once
- More framework tenders are available – with multiple winners
Bidding for tenders is often no more difficult than quoting for a decent-sized private sector job.
5 essential issues to consider before you bid
1. Read your tender documentation carefully in terms of what the clients’ requirements and expectations really are. Be aware of any mandatory requirements and be sure you can meet them. Eg health and safety policies, quality procedures, minimum turnover, key staff to possess certain key qualifications. If in doubt contact the client and ask.
2. Think about how you’re going to describe to the buyer how your company’s skills and capabilities can fulfil his / her specific requirements. You will obviously need to state what these skills are but you should try to give details of them in a way that shows how they best qualify you to match the buyer’s needs and bring benefit.
3. Get your company policies ready. The bidding process in procurement specification will include a reference to company policies; some requesting that copies be included as part of the tender submission, others asking for details to be included within the text of the submission.
Typical policies include : employers liability, public liability, insurance certificates, health & safety policy, environmental policy, waste disposal policy
4. Be realistic about the limitations of your business and how much you can deliver. Consider this from the clients’ perspective and how they will view the facts and figures that you will be required to provide about your business. Review this information carefully. Are there potential gaps or weaknesses in your capability ? If so, consider discussing these with the client before submitting. Also, estimate the costs of fulfilling the contract and your potential profit over the duration of the contract to see if it is worthwhile bidding.
5. Would it be better to collaborate ? If you think there is a real possibility that your bid might be discounted (perhaps because your firm is too small for this particular contract or doesn’t have the full suite of skills required) but does possess a strong capability in one of the key areas of the tender then why not consider a joint bid with another business whose skills / experience complement your own ?
And know when to walk away. The bravest decision is sometimes not to bid for a particular tender if you honestly feel your business may possess weaknesses in some key areas required in this particular contract. Thousands of new tenders are published every month. So there will always be other tenders that better match the all-round capabilities of your business !
3 Tips to make your tender bid stand out
If your bid and a competitor’s bid both provide very similar benefits, how can you make your bid stand out as better ? Here are 3 actions you can take.
1. Provide Concrete Examples The clearer the mental pictures your words create in the buyer’s mind, the better. So talk about real physical things and real actions whenever possible. There’s no harm in just saying “We have strict quality control procedures’’ (the buyer will want to see that anyway). The buyer can better grasp the practical value when you also provide a concrete example, such as in this example for a cleaning tender :
“Our strict quality control procedures require that the supervisor walks around the building and checks the quality of all of the areas that have been cleaned. If he or she finds any substandard cleaning, it is rectified before leaving. Additional quality control procedures are listed in our Quality Control manual in Appendix 2”
2. Explain Benefits, Not Just Features. People don’t buy features, they buy benefits. But often the buyer might need the benefits spelling out in more detail than you expect. For example :
“We use the latest advanced XYZ pipe and cable detection equipment” doesn’t help the buyer very much. The unstated mental response is: “So what ?” You need to answer the ‘so what?’ question within the statement. For example:
“Many brownfield sites have cables and pipes which are in use, but which are unmapped. During the groundworks stage, those unmapped cables and pipes pose a risk of interruption of service. We avoid that risk by detecting them beforehand, using our advanced XYZ pipe and cable detection equipment.”
If you can provide specific relatable examples too, so much the better.
3. Use Case Studies As Proof. Providing concrete examples of individual claims is great. But you can go one step further, and provide factual case studies as well.
Essentially you should use a case study of a client who had a problem or situation very similar to the current contract in the tender. The problem is described, and its impact and consequences for the past client are explored. Then the solution is presented. The case study demonstrates how your solution solved the problem and created practical benefits for the client.
Case studies – especially when backed up by testimonials – prove that your product or service package really does work, thus reducing the risk involved in selecting you as the preferred supplier
Is our company too small to bid ?
The simple answer is no, tenders are issued for a wide array of different products and services with values starting from as little as £5,000, so there is always a bidding process in procurement suited to the size and capacity of your company.
The Government has given all UK public sector bodies a 25% target of tenders that should be awarded to SMEs and micro businesses to further encourage their participation in the public sector marketplace.
Also, many local authorities and councils have pledged to increase their business with SMEs even more – recognising the innovation and increased local employment that they can bring. Some even mark their tenders as “SME Friendly” !
We are often asked “but won’t the big companies bid for and win them all?” The answer is no. Big companies only tender for extremely high value contracts. It is impractical for them to bid for lower value contracts, as their high overheads make them not cost effective.
So, to coin a phrase, ‘pick your battles carefully’ and, as a guide, follow these three golden rules:
1. Only bid for contracts that are within the scope of your anticipated turnover. Don’t consider any that are in excess of 25%
2. Only bid for contracts that won’t impact on your ability to fulfil your existing contracts
3. Only bid for contracts for which you have existing experience within your company.
Are tenders won purely on price ?
Many people have this perception that winning tenders is all about price. Yet this is genuinely not the case.
The bidding process in procurement is commonly assessed using a ‘weighted scoring’ system. This means that a tender is broken down into sections, with each section being ‘worth’ so many points in the assessment.
For example, in one tender, product quality may be worth 30% of the total, price 40% and other factors 30%. But another tender which really is price-sensitive will have maybe 80% of the points assigned to price.
Because this ‘weighted scoring’ method allows the various factors in each tender to be assessed in a balanced manner, it results in the selection of the Most Economically Advantageous Tender (or MEAT for short) commonly used by UK public sector buyers.
But if this is called the Most Economically Advantageous Tender, doesn’t this mean that the winning tenders are bound to be the cheapest ones ? No, that’s not the case. It’s really about value for money – and value is not purely represented by the price. A shortfall in, say, the quality area can have significant economic implications.
For example, if you were a hospital concerned about lawsuits from aggrieved relatives of patients catching MRSA, would you simply opt for the cheapest ward cleaning service, irrespective of quality? Obviously you wouldn’t. So the cleaning contract will go – not to the company that puts in the lowest bid – but to the one that can demonstrate the required quality of service at an acceptable price.
So quality has an economic value, which is why a MEAT evaluation includes it in the assessment. Similar reasoning applies to other non-price factors such as supplier stability, reliability, capacity etc.
Don’t think that winning the bidding process in procurement is just about having the lowest price. If you can show that you truly have the best all-round solution, you can win that tender and still make a profit!
Most common mistakes made by tender bidders
Here are the most common – and costly – errors made by tender bidders. As you’ll see, most are easily avoidable !
- Trivial mistakes are often made because the bidder hasn’t properly followed the instructions in the tender documents. In the main this comes from not reading the documents through properly. A small error like that can cost you your entire submission. So our advice is to read all the documents yourself carefully and then ask a colleague to also read them before actually starting on your responses.
- Not meeting the pass / fail criteria but still drafting a response. If you can’t meet the pass / fail criteria then don’t bother going ahead with the bidding process in procurement. You will waste a lot of time drafting a response that won’t even be read.
- Using technical jargon. Avoid jargon unless it is unavoidable. Just because you understand the terminology does not mean the buyer will. Lack of visuals If visuals (Eg images / graphs) are allowed in the tender then be sure to include some. There is no better way to show the buyer what you have previously delivered than by using images to support it.
- Copying & pasting from previous bids. Using previous bid responses is fine if they fully answer the question in hand. But in most cases this is not the case and almost all tenders will require some tweaking of the responses to match the demands of the buyer.
- Lack of evidence. Don’t make claims about your product or service without qualifying or providing evidence. Otherwise this leaves the buyer with no option but to question if the statements are true. So the lesson to be learned is: anything that you state you are capable of, have done in the past or that your products / services will achieve must be quantified and / or evidenced Eg case study / testimonial.
- Question not answered correctly It’s stating the obvious but answering a bid question incorrectly is going to get you zero marks. But bidders often misinterpret a question. If in doubt, always ask the buyer for clarification.
- Question not answered fully. It is so easy to skip over a couple of the objectives mentioned in the bidding process in procurement in order to write a quick, easy answer. But doing so will only result in a poor score. Those objectives are mentioned for a reason. They are of importance to the buyer – he / she will want to see how you will fulfil their needs should you win the contract.
- Missing documents. You must follow the guidance notes precisely. If the guidance notes ask for copies of certain policies, accounts or signed appendices then make sure to include them. Failure to do so will often result in disqualification.
- Bid submitted too late! If you can’t work to the timescale given then don’t waste your time writing responses. A tender submitted even one second late on an online portal will be automatically disqualified.
What are your chances of success ?
There is no magic formula and there are no guarantees of success but if you are well prepared and have been careful to bid for contracts you have the capability to win, then you have maximised your chances. If you are unsuccessful use it as an opportunity to improve your next bid by asking the buyer for feedback. The UK public sector spends over £220 billion every year so it won’t be long before your next tender opportunity comes along.
Total Tenders is a licensed tenders publisher. We publish tenders in over 9000 tender categories so we’ll match your company to lucrative tenders from a multitude of organisations that need your products and services.
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