Last edited 26 Jul 2019

Variant bids in the construction industry

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. An invitation to tender might be issued for a range of contracts, including; equipment supply, the main construction contract (perhaps including design by the contractor), demolition, enabling works, etc.

In response to an invitation to tender, invited tenderers will submit their tender, which will include their price for supplying the goods or services along with proposals for how the client's requirements will be satisfied if these have been requested.

A variant bid, sometimes referred to as an alternative or non-compliant proposal, may be submitted if the tenderer believes that an alternative to what has been requested by the client could offer better value for money and/or is a more innovative solution. Non-compliant proposals should only be submitted if they have been requested or are explicitly permitted by the client, and they should be accompanied by a compliant proposal. By submitting a compliant bid alongside a variant bid, the client is able to consider them both together and so properly assess the value for money offered by the variant bid.

On public sector projects, a contract notice published under the OJEU regulations must contain a clause indicating whether or not variant bids will be accepted. It can be more difficult to tell whether or not a variant bid will be accepted on a private sector tender. If it is not specified one way or the other in the contract notice, there may be guidance in the appropriate tender documents (i.e. in the instructions to tenderers or specification). Otherwise, the only way to ascertain whether it will be permitted may be to contact the client directly for clarification.

Tenderer submissions should clearly state if they are returning a variant bid and, if appropriate, provide clarity on which specification items the variant has deviated from, as well as how the required outcomes will be achieved. The tenderer must persuade the buyer that the alternative proposal does not increase the level of risk and convince them of the potential benefits. The tenderer must be prepared to provide further details if necessary and to answer questions regarding the variations which are likely to follow the submission.

A variant bid may not be allowed if the contracting authority believes it would make the tendering exercise less equitable and fair as it could leave them open to challenge from an unsuccessful tenderer if they were to award the contract to the variant bid. It might also not be allowed due to the extra time and effort required to assess the bid alongside the others that may be compliant with the specifications. Since set outputs are usually established to enable fair comparison of submitted tenders, a variant bid may result in different outputs, as well as different prices, rates, and so on. Therefore, the client may, for the sake of ease and reduced risk, decide that all tenderers must submit compliant bids.

However, clients may want to allow variant bids on the basis that it may result in better value for money, innovation and a better design outcome that draws upon the expertise and experience of the bidders. They might also be concerned that bidders who may otherwise successfully meet the specified outcomes could be deterred from tendering if they are unable to submit certain, perhaps minor, variations.