Last edited 05 Jan 2016

Selective tendering

A tender is a submission made by a prospective supplier in response to an invitation to tender. It makes an offer for the supply of goods or services. In construction, the main tender process is generally the selection, by the client, of a contractor to construct the works. However, as procurement routes have become more complex, so tenders may be sought for a wide range of goods and services.

Irrespective of the nature of the goods or services that are being sought, securing tenders generally follows one of a number of basic procedures:

Open tendering allows anyone to submit a tender to supply the goods or services that are required, generally in response to an advert giving notice that the contract is being tendered. On larger projects, there may then be a pre-qualification process that produces a short-list of suitable suppliers who will be invited to prepare tenders. This sort of pre-qualification process is not the same as selective tendering.

Selective tendering only allows suppliers to submit tenders by invitation. A pre-selected list of possible suppliers is prepared that are known by their track record to be suitable for a contract of the size, nature and complexity required. They might then be asked if they would be interested in tendering for the contract, and then based on the responses received, a number of them invited to tender (generally no more than 6). From the tenders received, a preferred tenderer is selected based on criteria such as price and quality and negotiations entered into.

Consultants or experienced clients may maintain ‘approved’ lists of prospective suppliers appropriate for particular types of contract and then regularly review performance to assess whether they should remain on the list.

Selective tendering may be particularly appropriate for specialist or complex contracts, or contracts where there are only a few suitable firms. Selective tendering will tend to be faster than open tendering, and can be seen as less wasteful, as there is no pre-qualification process as part of the tender procedure itself, and only suppliers that are known to be appropriate for the proposed contract are invited to prepare tenders. It can also give clients greater confidence that their requirements will be satisfied.

However, it can exclude smaller suppliers or those trying to establish themselves in a new market, it can reduce the potential for innovation, and it can be seen to introduce bias into tendering as firms may be excluded from approved lists for unknown reasons, because of a lack of awareness, or because of personal preferences. It can also result in prospective suppliers continually contacting clients and consultants to check that they are on the appropriate lists.

On public projects, or projects that include a publicly-funded element it may be necessary to advertise contracts. This is a requirement of the Public Contracts Regulations, intended to open up public procurement within the European Union and to ensure the free movement of supplies, services and works (see OJEU for more information).

Selective tendering can be either single stage or two stage. Two-stage tendering is used to allow early appointment of a supplier, prior to the completion of all the information required to enable them to offer a fixed price. In the first stage, a limited appointment is agreed allowing them to begin work and in the second stage a fixed price is negotiated for the contract.

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