With the recent political kerfuffle around Defence Minister Kevin Andrews’ “competitive evaluation process” to procure new submarines, I thought it was a good time to review the different types of professional services tenders.
According to Andrews, “Tender has a very specific meaning. We have to evaluate a whole range of issues … I’m not going to get into all sorts of definitions and what’s a definition of that is, I’m saying as the Australian Defence Minister, this is the approach we are taking”.
If his description leaves you confused, don’t worry – I’ll go through the different types of tenders and, more importantly, explain what they mean for you in professional services.
“Open” or public tenders and proposals
Recently, Prime Minister Tony Abbott stated in question time, “Do you know about an open tender? Anyone can compete. What the Leader of the Opposition wants is for anyone to be able to compete to provide Australia’s next generation of submarines. He might want the Russians to compete – the Putin class subs… Now he says you have got to have an open tender. We could have Kim Jong-il class submarines or Vladimir Putin submarines”.
I’m not sure about “Jong-il” or “Putin class submarines”, but Tony’s certainly right about one thing: an open tender is just that, open to anyone.
Generally advertised (though not always widely) through government websites, paid tender alert subscription services, in media or trade journals, this type of procurement invites any interested person or party to submit a tender.
Open tenders are most likely to be issued by government or government entities that are required to seek competitive proposals.
“Closed” or invitation only tenders and proposals
As the name suggests, closed tenders involve only selected bidders. Those invited have been pre-qualified in some way – perhaps by successfully making it through round one of an Expression of Interest (EOI), or by being invited based on an existing relationship or reputation.
Closed tenders are most likely to be found in the private sector.
Other names for professional services tenders
Some of the other names for tenders commonly found in the professional services context include:
- Unsolicited proposal
- Application for Inclusion (AFI) or Request for Registration of Interest (ROI)
- Request for Quote (RFQ)
- Request for Information (RFI)
- Application for Pre-qualification
- Services Survey for the supply of services
- Request for Application (RFA)
- Invitation to Participate (ITP)
- Request for Offer (RFO).
Each of these processes has a slightly different structure and purpose. For an overview of them, download our free resource – Tender, bid & proposal types: a quick guide for professional services.
Terms floating around for the actual process of preparing a submission (“tendering”) include: capture planning, bidding, pursuits (popular in accounting) and pitches (popular in architecture, graphic design and advertising).
Reality-check your participation in a competitive evaluation process
Whatever you call the document or the process itself, participating in a competitive selection exercise can certainly be an effective mechanism to win a new client or contract, or to retain and grow an existing relationship. A big tender win can shore up revenue streams and be truly transformative for a firm’s future.
However, if you are considering participating in a competitive evaluation process, you must reality-check your chances.
For an unsolicited proposal, is your offer truly unique? With applications for pre-qualification or inclusion, are you prepared to do further work to leverage your position and build relationships once you’re on the list? With a general call for RFIs, is the vendor genuine about proceeding to a formal tender? Or are they just wasting everyone’s time with tyre kicking on epic scale because it’s a cheap form of market research?
To critically evaluate your tender strategy, use our helpful bid or no-bid checklist.
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Firstly, what are closed or invitation only tenders, bids and proposals? In addition to the generally well-understood terms ‘tender’, ‘bid’ and ‘proposal’, there are ‘open’ and ‘closed’ processes, and then variations within each that can apply to professional services procurement. Open or public tenders, bids and proposals An open tender is just that, open to […]